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CEWE confirms all its annual targets after sound Q3

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) reaffirms its income forecast for 2018 against a background of sound development in turnover and earnings: Group turnover in the third quarter rose by 6.9 million to 137.2 million euros, with the EBIT at 1.4 million euros, falling short of the figure for the previous year (Q3 2017: 3.6 million euros). "In the first three quarters of the year, we not only handled the continued seasonal shift to the fourth quarter. At the same time we also assimilated anticipated negative effects resulting from the acquisitions and increases in costs for commercial online printing. With this good development, in particular in the photofinishing segment, we created a sound basis in Q3 2018 to be able to achieve our targets for the year as a whole. We are perfectly equipped for the expected peaks in demand in the fourth quarter," emphasises CEO Dr. Christian Friege.

Just as in previous years, the management expects CEWE to grow once again in the fourth quarter and to reach all its target figures. In the past few years, the fourth quarter has become increasingly more significant for the results achieved by the Group during the year as a whole. The planned annual yield is to be generated in the fourth quarter of the current financial year as well: For twelve years, the earnings contribution of the important Christmas quarter has increased year on year. In 2018 the overall aim is for the EBIT is to reach an amount in the range of 48 million to 54 million euros, with Group turnover increasing from 630 million to 665 million euros. The EBT for the 2018 financial year is to be in the range of 47.5 million to 53.5 million euros, with after-tax earnings at 33 million to 37 million euros.


Photofinishing: increase in turnover and clear growth in revenue per photo

Core business, which was negatively affected by an unusually long, hot summer, was more than compensated for by the Cheerz acquisition. Photofinishing achieved turnover of 100.4 million euros overall in Q3, which was an increase of 4.3% against that of the previous year (Q3 2017: 96.3 million euros). The brand products CEWE WALL ART and CEWE CALENDARS showed a strong increase in volume, while weather conditions, which were not order friendly, and the ongoing seasonal shift to the fourth quarter saw the number of CEWE PHOTOBOOK copies, at 1.32 million books, somewhat reduced against the number sold in the previous year (Q3 2017: 1.36 million books). In addition to the contribution to earnings by Cheerz, which was still (as scheduled) negative, the seasonal shift also resulted in the achieved photofinishing EBIT of 3.1 million euros falling short of the figure for the previous year (Q3 2017: 4.1 million euros). The trend towards high-quality photo products was maintained unchanged: the revenue per photo increased against that of the previous year by 8.0%, to 19.55 cents (Q3 2017: 18.11 cents).


Commercial online printing grows significantly as a result of LASERLINE acquisition

At 23.9 million euros, turnover in commercial online printing rose by 18.2% (Q3 2017: 20.2 million euros) mainly as a result of the acquisition of LASERLINE. This business segment also reported a slight organic increase in turnover in spite of the continued Brexit-induced decline in business in Britain and the ongoing strong price pressure in domestic competition. On the inclusion of the expected negative contribution to EBIT by LASERLINE, the business segment of online commercial printing reported negative EBIT of -0.9 million euros (Q3 2017: 0.4 million euros). In addition to the integration costs for LASERLINE, higher paper prices in the cost of sales and an increase in personnel costs had a negative effect on earnings. As of 2019, LASERLINE is to contribute positively to EBIT.


Focus on photofinishing products reduces hardware sales in retailing

In retailing, CEWE continues to focus on photofinishing products and high-quality, high-margin premium cameras while consciously abstaining from low-margin sales. This is why retailing recorded a decline in turnover to 11.8 million euros in the third quarter (Q3 2017: 13.0 million euros). In spite of the lower turnover, the EBIT, at -0.1 million euros, was at exactly the same level as in the previous year. In this case it must be taken into account that the turnover of photofinishing products achieved in retailing are reported in the business segment of photofinishing.


Brisk Christmas business expected in Q4

Q4 is traditionally decisive for the net result of the company. "Our high-quality photo products, in particular the CEWE PHOTOBOOK and CEWE CALENDAR, are an ideal, very personal Christmas gift. This is why we expect Christmas business to be strong this year again, the outcome of which will be that we achieve all our corporate targets," says Dr. Christian Friege. Developments in October make him optimistic.


Capital ratio is 54.8%, ROCE 15.1%

The capital ratio was an extremely sound 54.8% as at 30 September 2018 (30 September 2017: 57.0%). As a benchmark, the return on capital employed (ROCE) fell from 19.3% on 30 September 2017 to what is still a very respectable 15.1% as at the seasonal-related low, with the acquisitions of Saxopark, Cheerz and LASERLINE raising the capital employed and reducing the ROCE. CFO Dr. Olaf Holzkämper: "Our sound financial situation and our high earning power make it possible for us to continue to develop our business segments in future. Our staff, our customers and not least of all our shareholders, whom we wish to continue to offer increasing dividends, benefit from this development."


CEWE shows innovative technologies at the photokina

CEWE presented some solutions for innovative further developments at the photokina trade fair in Cologne at the end of September. The products presented by the company included "hexxas" - hexagonal photo tiles which are fastened to the wall with magnets just as you choose. Another major topic for CEWE customers was the company's 'Smart Solutions' for example, the "CEWE PHOTOBOOK on Command", which is an assistant system for creating a book which will in future make use of different technologies such as face recognition, voice control and artificial intelligence. During the trade fair, CEWE was also awarded the prestigious TIPA World Award as the "Best Photo Print Service Worldwide" for its technology to enhance the cover of the CEWE PHOTOBOOK. Previously, the CEWE PHOTO BOOK pure had been awarded the well-known EISA Award as "Best Product 2018/2019".

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