14/05-19 - Press releases

CEWE: Increase in sales and earnings in Q1 2019

• CEWE PHOTOBOOK sales grow by a considerable 6.9 % to 1.334 million books
• Increase of 7.5 % in turnover to 140.4 million euros
• EBIT increases by 1.7 million euros over that of the same quarter of the previous year, to 1.9 million euros
• 2019 forecasts confirmed: EBIT is to increase to up to 58 million euros

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) continues to grow in Q1 2019 as well: Turnover was even raised by 7.5 % over that of the same quarter of the previous year, to 140.4 million euros (Q1 2018: 130.6 million euros). At 1.9 million euros, the 2019 Q1 EBIT clearly exceeds that of the same quarter of the previous year (Q1 2018: 0.2 million euros). The main growth driver in this case was the core business of photofinishing: The business segment with the highest sales generated strong growth of 9.6 %, to 103.5 million euros (Q1 2018: 94.5 million euros). "We sold our CEWE PHOTOBOOK more frequently in Q1 2019 than in any other previous first quarter although our Easter business was conducted in the second quarter this year, unlike in 2018. We are pleased that more than anything else, it is our most important product that contributes considerably to our corporate growth," says Dr. Christian Friege, Chairman of the CEWE Stiftung & Co. KGaA Board of Management.

Photofinishing grows dynamically
With 1,334 million books sold in Q1 2019, CEWE sold more CEWE PHOTOBOOKS than ever before in the first quarter of a year (2018: 1.248 million books). The "Cheerz" acquisition also contributed to the rise in sales in the photofinishing division. The other product groups also all returned good results: CEWE CALENDARS, CEWE CARDS, CEWE WALL ART and CEWE INSTANT PHOTOS continued to grow in comparison to the previous year. In Q1, the number of photos produced grew by 8.7 % over the number for the previous year, to 506.3 million photos. This is particularly pleasing given that in 2019, Easter business is only included in the second quarter. The increase in turnover also saw the level of profitability in photofinishing business improving, to EBIT in the amount of 3.0 million euros (Q1 2018: 1.4 million euros). CEWE will strengthen the business division even more with its recently announced takeover of wall art specialist WhiteWall, which is expected to have a sustained positive effect on our future turnover, earnings and corporate value.

The core business of WhiteWall lies in sophisticated gallery-quality wall art. WhiteWall enjoys an excellent reputation with professional and amateur photographers thanks to its outstanding product quality. The brand is growing dynamically and besides Germany, it is
active in many European countries and the USA. As a member of the CEWE Group, WhiteWall will remain an independent brand with its own production. CEWE intends to correspondingly promote the brand and the relevant business.

Commercial Online Printing grows organically
Even though the LASERLINE acquisition was concluded a year ago, the business division of Commercial Online Printing has continued to increase, to reach organic growth of 3.3 %, to 25.2 million euros in the first quarter (Q1 2018: 24.4 million euros). The result would have been better were it not for ongoing high pressure on prices in Germany and continued weak UK business as a result of Brexit effects. The EBIT for the business division, at -0.4 million euros, was only 34,000 euros below the result for the same period of the previous year (Q1 2018: -0.3 million euros).

Turnover in the business division of retailing declining as scheduled
Consciously forfeiting low-margin transactions in hardware retailing has seen turnover in the business division continuing to decrease as scheduled, by 4.2 % to 10.4 million euros (Q1 2018: 10.8 million euros). The strategy has thus paid off in terms of the EBIT: at -0.4 million euros it shows a slight improvement against that of the previous year (Q1 2018: -0.5 million euros). Earnings in the first quarter are traditionally negative in retailing for seasonal reasons.

At 54.9 %, capital ratio remains extremely sound
Despite a balance sheet extension based on IFRS 16 provisions (lease accounting) the capital ratio as at 31 March 2019, at around 63 million euros, amounts to a very sound 54.9 % (31 March 2018: 57.1 %). The capital ratio would have risen by as much as 63.5 % over that of the previous year without the balance sheet extension. The ROCE reached a very good level at 17.6 %, and without any IFRS 16 effect it would even have been at 18.5 % (Q1 2018: 18.9 %).

2019 outlook: EBIT is to rise to up to 58 million euros
The good results of the first quarter support the forecast of the Board of Management for the full year of 2019. CEWE expects to see more growth impulses from the acquisition of wall-art specialist WhiteWall as of mid-year. The Board of Management is raising the original sales target for 2019 accordingly, from a range of 655 to 690 million euros to sales in the range of 675 to 710 million euros. Since the contribution to EBIT made by WhiteWall in 2019 is expected to still be slightly negative, due, among other things, to transaction costs, the Board of Management is adjusting its lower target limit for EBIT from 52 million to 51 million euros. Following the success achieved in the first quarter, the ceiling for the planned EBIT target range remains unchanged at 58 million euros. The company also plans to continue its quest for value-oriented growth combined with a reliable dividend strategy in 2019. CEWE will be proposing a dividend of 1.95 euros for the 2018 financial year to its shareholders at the Annual General Meeting on 5 June 2019 – this would be the tenth consecutive dividend increase.