CEWE intends to continue growing in 2018

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) once again achieved all its corporate targets in the 2017 financial year. Thanks to the company's strong earnings and sound financial position, the Board of Management and the Supervisory Board are able to propose the ninth consecutive increase in dividends at the Annual General Meeting. CEWE is aiming for another increase in turnover and earnings in 2018, with the earning power in photofinishing business in particular contributing to this rise, in addition to positive earnings in commercial online printing and retailing once again. This was announced by CEWE during the Annual Report and Analysts' Press Conference held today in Frankfurt am Main. "Our goal is to continue to enhance customer satisfaction as the focus of our activities, thus steadily raising our corporate value and enabling our shareholders to be a part of this growth," says Dr. Christian Friege, Chairman of the Board of Management of CEWE Stiftung & Co. KGaA.

CEWE increases turnover and earnings
An important 2016 trend was maintained: the Group's business segments all showed positive results. In 2017 CEWE turnover increased by 1.1 % to 599.4 m. euros (previous year of 2016: 593.1 m. euros) and was thus exactly in the target corridor of 585 m. to 615 m. euros. In the second half-year period in particular, the CEWE PHOTO BOOK even withstood the difficult market situation that prevailed especially in Germany as a result of the drastic increase in VAT, from 7 % to 19 %, which entered into effect in 2017. "Our customers remain loyal in spite of the higher VAT. This shows that we are on the right track with our high standards of product quality and customer service," says Dr. Christian Friege.

Moderate increase in expenditure for marketing reinforces brand awareness and growth
CEWE invested considerably in CEWE brand products in 2017 as well, slightly increasing its marketing expenditure for photofinishing. The effects on brand awareness are clearly positive: unsupported brand awareness was raised by a considerable 7 percentage points, to reach 57 %. With support included, as many as 75 % of the respondents knew of the CEWE PHOTO BOOK. Dr. Friege: "Customers make a conscious decision in favour of CEWE brand products because they can rely on our performance promise. This is what makes the brand so strong, and our retail partners in Europe benefit from this strength." This is one of the reasons why Group EBIT climbed to 49.2 m. euros in the 2017 financial year (2016: 47.0 m. euros).

After-tax earnings grow by 10.5 %: ROCE remains high at 20.1 %
In 2017 CEWE increased its after-tax earnings by 10.5 %, from 30.4 m. euros to 33.6 m. euros, thus reaching the top end of the target corridor of 30 to 34 m. euros. Earnings per share increased to 4.70 euros, and were thus at the upper end of the target corridor of 4.23 to 4.81 euros (2016: 4.25 euros). At 20.1 %, the return on capital employed (ROCE) once again reached a very good level (2016: 21.3 %). Increase in earnings makes it possible to raise dividends for the ninth consecutive year On the basis of the positive development in earnings and a generally sound financial situation, the Board of Management and the Supervisory Board have resolved to propose to the shareholders a dividend of 1.85 euros (2016: 1.80 euros) at the Annual General Meeting on 6 June 2018. This is also the ninth dividend increase in succession for CEWE. With the dividend proposed, shareholders are achieving a dividend yield of 2.1 % on the basis of the price at the end of 2017 (88,05 euros). The total return for shareholders was 6.24 % last year on the basis of the dividend for 2016 and the share-price development.

Core business of photofinishing withstands increase in VAT
In spite of the increase in VAT on photo books in Germany, which entered into force on 1 January 2017 and amounted to 19 % after a previous 7 %, the biggest CEWE business segment nevertheless increased its earnings. With the number of photos sold decreasing marginally, turnover in the photofinishing segment rose by 1.6 % to 459.3 m. euros (2016: 452.0 m. euros). This saw EBIT, at 53.9 m. euros, exceeding the same figure for the previous year by 3.7 % (2016: 52.0 m. euros). This development is due to the stable trend towards high-quality photo products, with turnover per photo increasing by 4.3 % to 21.12 eurocents in 2017 – a new record (2016: 20.25 eurocents). The market situation remained generally difficult for CEWE retailing activities in 2017, with margins low. Turnover thus dropped by 3.5 % to € 53.0 m. euros (2016: 54.9 m. euros). A slight EBIT decline was also recorded, down to 0.3 m. euros (previous year: 0.6 m. euros).

Commercial online printing at last year's level in spite of Brexit
In spite of the negative impact of Brexit on UK business and the considerable price pressure on the market, particularly in Germany, turnover in the business segment of commercial online printing, at 84.0 m. euros, was at exactly the same level as in the previous year. CEWE used the past financial year to further expand the sales channels for commercial online printing, to extend its product range and to strengthen the company through the acquisition of online printing supplier LASERLINE. The EBIT generated by the business segment developed positively, increasing over that of the previous year by 2.8 %, to 1.64 m. euros (2016: 1.60 m. euros).

CEWE increases fourth-quarter turnover by 2.6 %
In the fourth quarter – typically the strongest quarter from a seasonal point of view – CEWE increased its turnover by 2.6 % to 234.5 m. euros (2016: 228.5 m. euros). The increase in EBIT to 46.1 m. euros corresponded to as much as 7.2 % in comparison to the previous year (2016: 42.9 m. euros). Turnover in the most important segment of photofinishing grew particularly well, by 2.8 %, to 195.4 m. euros (2016: 190.0 m. euros). "Our high-quality CEWE brand products remain attractive as Christmas gifts," says Dr. Christian Friege. The other two business segments also contributed to the positive quarterly growth: retailing increased its turnover in the fourth quarter by 2.0 % to 15.9 m. euros (2016: 14.7 m. euros). In the fourth quarter, commercial online printing achieved turnover in the amount of 23.3 m. euros, thus exceeding the figure for the previous year by 0.7 % (2016: 23.1 m. euros).

Takeovers promise further growth
In the past few months, CEWE has taken over the online printing company LASERLINE as well as acquiring 80 % of the shares in leading French photo app company "Cheerz". The company is using these two acquisitions to set a growth impulse in commercial online printing and photofinishing, thus expecting to generate sustained positive effects on the value of CEWE on the whole.

2018 target corridor: sights set on growth in sales and earnings
CEWE Group turnover is to clearly exceed the 600-euro mark in 2018, and to increase to 630-665 m. euros, with turnover in photofinishing remaining stable or increasing slightly, supported by turnover from the acquisition of Cheerz Group stocks. Retailing is to record consistent to slightly declining development. Commercial online printing is also to rise on the majority of markets, with the British market possibly remaining an exception. Added to this is growth in turnover as a result of the acquisition of Laserline. In spite of the negative contribution as a result of the acquisition of Cheerz stocks still to be expected, Group EBIT is to be in a corridor of 40 m. to 54 m. euros, thus growing by up to 10 %. The EBT is to reach a figure in the range of 47.5 to 53.5 m. euros, with after-tax earnings forecast at 33 to 37 m. euros.


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