CEWE planning more growth in 2019 as well

  • Sales of CEWE PHOTOBOOK exceed expectations
  • Corporate targets all reached in 2018: turnover and EBIT each increase by around 9 %
  • Tenth consecutive dividend increase: 1.95 euros per share
  • 2019 forecast: turnover to rise to between 655 and 690 million euros, and EBIT to between 52 and 58 million euros

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) achieved or exceeded all its corporate targets in the 2018 financial year with turnover of 653.3 million euros (2017: 599.4 million euros) and EBIT of 53.7 million euros (2017: 49.2 million euros). Based on this positive development and the extremely sound financial position of the Group, the Board of Management and the Supervisory Board will be proposing the tenth consecutive dividend increase to shareholders: 1.95 euros per share (dividend for the previous year: 1.85 euros) at the Annual General Meeting. CEWE intends to continue to grow in the 2019 financial year as well: turnover is to increase to between 655 and 690 million euros, and EBIT to between 52 and 58 million euros. In 2019, the EBIT earnings corridor is thus to exceed the target for the previous year by around 4 million euros. “We are seeing the result of a simple yet effective strategy: the value of our company is enhanced by satisfied customers who place renewed orders and recommend us. We will resolutely maintain our pursuit of this basic idea in future, and plan to see it continuing to increase the value of our company and its dividends,” says Dr. Christian Friege, Chairman of the CEWE Stiftung & Co. KGaA Board of Management, in the CEWE Annual Report and analysts’ press conference held today in Frankfurt.

CEWE significantly increases turnover and earnings 
CEWE turnover in 2018 increased by 9.0 %, to 653.3 million euros (previous year of 2017: 599.4 million euros), thus reaching the 2017 EBIT target corridor of 630 million to 665 million euros. Sales of the CEWE PHOTOBOOK in particular grew considerably in 2018. “The strength of our brand, which stands for innovation, user-friendly services and product quality, has won through in the face of competition,” says Dr. Christian Friege.

Group EBIT increase to top end of the target corridor
Acquired companies Cheerz and LASERLINE also contributed to the increase in sales. Despite their negative contribution to the Group-EBIT, which had still been planned for, CEWE increased its operative earnings by 9.2 % to 53.7 million euros in the 2018 financial year (2017: 49.2 million euros). The company thus reached the top end of its target corridor (48 to 54 million euros).

After-tax earnings rise by 10.6 %, ROCE at a sound 17.9 %
2018 after-tax earnings reached 36.3 million euros, thus also reaching the top end of the target corridor of 33 to 37 million euros. This also applies for the earnings per share of 5.06 euros (target corridor: 4.55 to 5.13 euros, 2017: 4.59 euros). The return on capital employed (ROCE), at 17.9 %, once again reached an extremely sound level, even though the two acquisitions in the past financial year increased capital employed in 2018 while still (as scheduled) making negative contributions to earnings (2017 ROCE: 20.3%).

Good corporate figures increase dividends for the tenth year in succession
The Board of Management and the Supervisory Board have decided to propose a dividend of 1.95 euros to shareholders at the Annual General Meeting in Oldenburg on 5 June (dividend for the previous year: 1.85 euros). This is made possible by the positive development of the company and its stable financial position. Provided the shareholders give their approval, this would be the tenth consecutive dividend increase. Based on the price at the end of 2018 (62.10 euros), shareholders are achieving a dividend yield of 3.1 % with the dividend proposed.

Core business of photofinishing grows considerably
The main CEWE business segment developed outstandingly in 2018. The number of photos and CEWE PHOTOBOOKS sold clearly exceeded planned figures in absolute terms. The acquisition of Cheerz also contributed to this growth. Total turnover for the photofinishing segment increased by 8.6 %, to 499.0 million euros (2017: 459.3 million euros). Operative earnings (EBIT) increased markedly, by 7.2 % to 57.8 million euros (2017: 53.9 million euros). The trend towards sophisticated photo products has once again been confirmed. CEWE has never achieved a higher turnover per photo than the 22.42 eurocents achieved this year – an increase of 6.2 % over that of the previous year (2017: 21.12 eurocents).

The fourth quarter is of particular significance to CEWE, for traditional reasons since photo products are increasingly being ordered as Christmas gifts. In this context, peak demand once again increased in photofinishing this year, with turnover increasing by 11.7 % to 218.3 million euros (Q4 2017: 195.4 million euros). “We offer attractive, personal Christmas gifts with our high-quality photo products, and our customers appreciate this. “We benefit from our innovation, the outstanding quality of our CEWE products and the high level of brand loyalty shown by our customers. And we are helped by the trend towards mobile applications and the increase in the use of smartphones as really good cameras,” Christian Friege says.

Commercial online printing in a highly competitive market environment in 2018 
Turnover in the business segment of online printing rose in 2018, both organically and as a result of the LASERLINE takeover, by altogether a massive 21.0 %, to 101.6 million euros (2017: 84.0 million euros). In this business segment CEWE looks back on a year of particularly high competition on the market. The results showed strong price pressure, particularly in Germany and as a result of the negative effects of Brexit on the British market. Increases in the price of paper also saw a rise in the cost of sales last year. The EBIT for the business segment was -1.6 million euros, which did, however, include the negative effects from the integration of LASERLINE that had been budgeted for (EBIT for commercial online printing in 2017: 1.6 million euros). In the fourth quarter of 2018, commercial online printing, with an increase in turnover of 22.9 % to 28.6 million euros (2017: 23.3 million), was able to grow even stronger than in the year as a whole, recording a clearly higher earning power than in the past few quarters with a positive EBIT of 2.0 million euros.

Retailing continues with a successful focus on photofinishing business
Management of the retailing business sector remained earnings-related, in line with the business strategy, and reported turnover of 48.7 million euros (2017: 53.0 million euros). Despite a decrease in sales, the business segment, with EBIT at 0.1 million euros, contributed positively to the consolidated result (2017: 0.3 million euros). CEWE will continue to focus on its photofinishing business in future, and refrain from conducting low-margin hardware business. In this context it must be taken into account that the photofinishing orders received in retail trade are reported in the “photofinishing” segment.

2019 target corridor: further increase in sales and earnings
Turnover in the CEWE Group is to increase to an amount in the range of 655 to 690 million euros in 2019, with the management still expecting the focus of sales and earnings to continue to shift to the fourth quarter. Turnover in the field of photofinishing is to rise more, since the proportion of added-value products in photofinishing business should continue to increase. Development in the retailing sector is hence likely to be in the range of consistent to slightly declining. Commercial online printing is to grow organically in the majority of markets. The British market could remain an exception. Group EBIT is to be in a corridor of 52 million to 58 million euros. The management expects EBT to be in the range of 51.5 million to 57.5 million euros, with after-tax earnings at 35 million to 39 million euros. The Board of Management is thus raising the EBIT earnings corridor by around 4 million euros in comparison to the target set for the previous year.

Earnings by business segment

CEWE Unit Q4 2017 Q4 2018 2017 2018
(1) Photofinishing
Photos in bill. units 0.78 0.81 2.17 2.23
CEWE PHOTOBOOK in m. units 2.4 2.5 6.0 6.2
Turnover in EUR m. 195.4 218.3 459.3 499.0
EBIT in EUR m. 48.3 55.6 53.9 57.8
Purchase price allocation effect in EUR m. -0.1 -0.6 -0.4 -2.2
Sale of operation in Nuremberg in EUR m. +1.2
Costs for photokina fair in EUR m. -1.3
Sale of property in Denmark in EUR m. +0.5
Additional expenditure for employee shares in EUR m. -0.6 -0.6
EBIT before one-off effects in EUR m. 49.0 56.2 54.5 60.2
(2) Retailing
Turnover in EUR m. 15.0 13.6 53.0 48.7
EBIT in EUR m. 0.7 0.8 0.3 0.1
(3) Commercial online printing
Turnover in EUR m. 23.3 28.6 84.0 101.6
EBIT in EUR m. 1.4 2.0 1.6 -1.6
Purchase price allocation effect in EUR m. -0.1 -0.2 -0.6 -1.0
LASERLINE integration costs in EUR m. -0.1 -0.9
EBIT before one-off effects in EUR m. 1.6 2.3 2.3 0.3
(3) Other
Turnover in EUR m. 0.8 1.1 3.3 4.0
EBIT in EUR m. -4.3 -1.0 -6.6 -2.6
Impairment write-down in EUR m. -3.5 -3.5
Purchase price allocation effect in EUR m. -0.1 -0.5
EBIT before one-off effects in EUR m. -0.7 -1.0 -2.6 -2.6
CEWE Group Unit Q4 2017 Q4 2018 2017 2018
Turnover in EUR m. 234.5 261.6 599.4 653.3
EBIT in EUR m. 46.1 57.5 49.2 53.7
Total one-off effects in EUR m. -4.6 -0.9 -5.3 -4.2
EBIT before one-off effects in EUR m. 50.7 58.4 54.5 57.9
EBT in EUR m. 45.5 57.3 48.9 53.3
Earnings after tax in EUR m. 30.7 39.2 32.8 36.3

 

Rounding differences may occur. Percentage deviations have all been calculated at the exact values.
Notes to the “Earnings by Business Segment” chart

(1) Photofinishing: The production and sale of photo products such as CEWE PHOTO BOOKS, CEWE CARDS, CEWE CALENDARS, CEWE WALL PICTURES and individual (analogue and digital) photos as well as other photo products.

(2) Retailing: Trading in photo hardware, such as cameras and lenses, in Norway, Sweden, Poland, the Czech Republic and Slovakia.

(3) Commercial online printing: Production and sale of commercial print products in the online printing portals, e.g. CEWE-PRINT.de, SAXOPRINT, Viaprinto and LASERLINE.

 

Overall year of 2018 in a comparison with the previous year and with targets, and targets for 2019

CEWE Group Unit 2017 2018
target
2018 actual 2019
target
Photos in billion units 2.18 2.12 to 2.14 2.23 2.22 to 2.26
CEWE PHOTOBOOK in m. units 6.0 6.08 to 6.14 6.18 6.24 to 6.31
Investments in EUR m. 44.6 55 49.6 55
Turnover in EUR m. 599.4 630 to 665 653.3 655 to 690
EBIT in EUR m. 49.2 48 to 54 53.7 52 to 58
EBT in EUR m. 48.9 47.5 to 53.5 53.3 51.5 to 57.5
Earnings after tax in EUR m. 32.8 33 to 37 36.3 35 to 39
Earnings per share EUR/share 4.59 4.55 to 5.13 5.06 4.84 to 5.40

 

* Operative investments without potential investments in expanding the business volume, such as corporate acquisitions and/or additional customer-base acquisitions

Rounding differences may occur. Percentage deviations have all been calculated at the exact values.