CEWE: growth in earnings through brand power

- Corporate targets all reached or exceeded in 2016

- CEWE PHOTO BOOK unsupported brand awareness rises to 51 %

- All three business segments return positive earnings in 2016

- CEWE ends 2016 with a capital ratio of 53.8 %

- Eighth consecutive dividend increase sought: 1.80 euros per share

Oldenburg/Frankfurt am Main, 23 March 2017. CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) achieved or exceeded all its corporate targets in the business year of 2016. The Board of Management and the Supervisory Board will be proposing the eighth consecutive dividend increase to the shareholders at the Annual General Meeting on the basis of the company's sustained high earnings quality and sound financial position. The company is aiming for more earnings-oriented growth in 2017, with the earning power in photofinishing business, and renewed positive earnings in commercial online printing and retailing contributing to this rise. This was announced by CEWE during the Annual Report and Analysts' Press Conference held today in Frankfurt am Main. "Our aim is to make our company more valuable year after year and to allow our shareholders to participate in our growing income in future as well," says Dr. Rolf Hollander, Chairman of the Board of Management of CEWE Stiftung & Co. KGaA.

Highest marketing expenses and highest earnings in the history of the company
In 2016 CEWE turnover increased by 7.0 % to 593.1 million euros (previous year of 2015: 554.2 million euros), thus considerably exceeding the target of 555 million to 575 million euros. The successful product portfolio, as well as the CEWE brand's considerable brand awareness and likeability, contributed to the positive development, with the unsupported brand awareness of the CEWE PHOTO BOOK rising to 51 % on the German market. At the same time, the net promoter score also improved again to reach 58 % - a record high typically only achieved by top international brands. "We are delighted that our customers have now become genuine brand ambassadors," says Dr. Hollander. The extremely positive attitude consumers have to the CEWE photofinishing range is not least of all also the result of the high quality of the product portfolio - a fact that was once again confirmed in many test firsts in 2016: national and international testers distinguished CEWE PRODUCTS more than 60 times. CEWE has made substantial investments in the brand in the past few years, and increased its marketing expenses for photofinishing tenfold since 2015, from 5 million to 54 million euros. CEWE has at the same time managed to consistently increase its income, with Group EBIT in the 2016 business year increasing to 47.0 million euros (2015: 36.4 million euros). Dr. Hollander: "Developing CEWE to a strong brand with annual increases in its marketing investments has clearly paid off: in 2016 we spent more money on marketing than ever before while at the same time achieving the best results of the past 56 years."

After-tax earnings increase by 35.2 % - ROCE climbs to 21.3 %
In 2016, impairment write-downs on futalis, DeinDesign and the British CEWE location had a negative effect at an EBIT level in the amount of a total 6.9 million euros. Although these negative effects did not have the effect of reducing taxes, CEWE increased its after-tax earnings by 35.2 %, from 22.5 million to 30.4 million euros (target figure: 29 million to 33 million euros). Earnings per share increased to 4.25 euros, and were thus within the target corridor of 4.00 to 4.57 euros (2015: 3.15 euros). The return on capital employed (ROCE) improved once again to reach 21.3 % in 2016 (2015: 17.2 %).

Sound financing and strong cash flow make it possible to increase dividends again
CEWE is aiming for the eighth consecutive dividend increase: on the basis of the positive development in earnings and the sound cash flow from operative business in the amount of 93 million euros, the Board of Management and the Supervisory Board have resolved to propose a dividend of 1.80 euros per share for the 2016 business year to the shareholders at the Annual General Meeting on 31 May 2017 (previous year: 1.60 euros per share). On the basis of the price at the end of 2016 (84,57 euros), shareholders are achieving a dividend yield of 2.1 % with the dividend proposed.

CEWE increases fourth-quarter turnover by 5.9 %
In what is typically the strongest quarter from the point of view of seasons, CEWE increased its turnover by 5.9 % to 228.5 million euros on the basis of the positive development in photofinishing and growth in commercial online printing. At 42.9 million euros, EBIT also exceeded the figure for the previous year by 5.3 % in the fourth quarter (Q4 2015: 40.8 million euros). CEWE thus generated around 38.5 % of its total annual turnover and 91 % of its income in the vital fourth quarter. "A CEWE photo product is the best Christmas gift ever - individual, personal and also self-made", says Dr. Hollander. The new products and the user-friendly apps for mobile devices such as smartphones and tablets have accelerated growth dynamics. The high-margin, added-value brand products such as the CEWE PHOTO BOOK, CEWE CALENDARS, CEWE CARDS, CEWE WALL PICTURES and other photo gifts were the most important driver of turnover. This is why the turnover per photo increased by 7.9%, from 22.6 eurocents in the same quarter of the previous year to 24.38 eurocents.

Core business of photofinishing boosts sales and earnings
The biggest CEWE business segment exceeded expectations once again in the 2016 business year: in comparison to the previous year, turnover rose by 8.9 % to 452 million euros, with EBIT, at 52.0 million euros, exceeding the same figure for the previous year by 29.5 % (2015: 40.2 million euros). The trend towards raised-value photo products continues to largely determine the development in turnover. This saw a renewed considerable 9.1% rise in turnover per photo. While CEWE reported turnover per photo at 18.57 eurocents in 2015, this figure amounted to 20.25 eurocents in the year of the report. CEWE confirmed the turnaround in retail earnings that was initiated in the previous year: with turnover at 54.9 million euros reduced intentionally by 9.7 % (2015: 60.8 million euros, CEWE generated slightly positive EBIT in the amount of 0.6 million euros (2015: -0.4 million euros). A stronger market focus and cost reductions in the sector offset the effect on earnings from the decline in turnover for business with cameras. Growth was once again reported for commercial online printing, which increased by 7.9 % to 84 million euros (2015: 77.8 million euros). This was the first time that the business segment achieved a positive EBIT on a full-year basis. With EBIT at 1.6 million euros, commercial online printing exceeded the figure for the previous year by 2.5 million euros. In the "Other" section, in which CEWE pools its structure costs and corporate costs as well as earnings from real-estate property and the acquisition of stocks, it was mainly goodwill depreciation in the amount of -3.9 million euros that resulted in EBIT of -7.2 million euros. The investments held in this business segment are typically in an early phase. "If we are convinced of a promising business model, we can justify accepting initial losses for a limited period," Dr. Hollander points out.

Higher value added tax on photo books in Germany
In 2017, the increased value added tax on photo books in Germany could have a negative effect on the turnover and yield of the company. The original increase in value added tax on photo books in Germany, from 7 % to 19 % and valid since 25 December 2015, was temporarily suspended until 31 December 2016. Since this regulation has now expired, photo books have been subject to value added tax of 19 % since 1 January 2017, instead of 7 %. Given the implementation of the higher rate of value added tax, CEWE, according to the current status of available information, presumes that the negative effect on EBIT will range from 0 euros to a maximum high, single-digit, million-euro amount - also possible, for example, in the event of a reduction in enquiries as a result of consumer price rises.

EBIT target corridor for 2017: + 5 million euros
In spite of the increased value added tax on photo books, Group turnover in 2017 is to rise slightly on average, from 593.1 million euros in the previous year of 2016 to an amount ranging from 585 million to 615 million euros. In this case, turnover in photofinishing is to remain approximately stable or increase slightly, the business segment of retailing is to show turnover to be about constant or slightly in decline and commercial online printing is to continue to increase its turnover on the majority of markets. The British market could prove to be an exception in the wake of the Brexit decision. Group EBIT is to be in a corridor of 45 to 51 million euros, EBT is to be in the range of 44.5 to 50.5 million euros, and after tax earnings between 30 and 34 million euros. In its forecast for 2017, the Board of Management is thus raising its operating EBIT result channel by around 5 million euros over the goals for 2016.
Earnings by business segment

CEWE	Unit	Q4 2015	Q4 2016	2015	2016
(1) Photofinishing
Digital prints	in m. units	761.2	768.0	2,164.1	2,176.2
Prints from films	in m. units	14.5	11.5	70.7	56.0
Total prints	in m. units	775.7	779.5	2,235	2,232
CEWE PHOTO BOOK	th. books	2,385.1	2,375.2	6,047.9	6,206.9
Turnover	in EUR m.	175.3	190.0	414.9	452.0
EBIT	in EUR m.	39.3	45.9	40.2	52.0
Restructuring costs	in EUR m.	---	---	-0.4	-0.2
Proceeds from US internet activity	in EUR m.	---	---	---	0.4
Goodwill amortisation	in EUR m.	-2.6	-2.1	-2.6	-3.0
Disposal of the operation in Graudenz, Poland	in EUR m.	---	---	---	0.3
Basic equipment for business partners	in EUR m.	---	---	---	2.1
Purchase price allocation effect	in EUR m.	-0.1	-0.1	-0.2	-0.4
EBIT before one-off effects	in EUR m.	42.1	48.1	43.4	52.8
(2) Retailing
Turnover	in EUR m.	17.3	14.7	60.8	54.9
EBIT	in EUR m.	0.9	1.0	-0.4	0.6
Restructuring costs	in EUR m.	---	---	-0.6	---
EBIT before one-off effects	in EUR m.	0.9	1.0	0.1	0.6
(3) Commercial online printing
Turnover	in EUR m.	22.8	23.1	77.8	84.0
EBIT	in EUR m.	1.6	1.1	-0.9	1.6
Purchase price allocation effect	in EUR m.	-0.5	-0.4	-2.1	-1.7
EBIT before one-off effects	in EUR m.	2.1	1.5	1.2	3.3
(3) Other
Turnover	in EUR m.	0.4	0.6	0.6	2.2
EBIT	in EUR m.	-1.07	-5.0	-2.4	-7.2
Goodwill amortisation	in EUR m.	---	-3.9	---	-3.9
Purchase price allocation effect	in EUR m.	-0.1	-0.1	-0.2	-0.5
EBIT before one-off effects	in EUR m.	-1.0	-1.0	-2.2	-2.8
CEWE Group		Q4 2015	Q4 2016	2015	2016
Turnover	in EUR m.	215.8	228.5	554.2	593.1
EBIT	in EUR m.	40.8	42.9	36.4	47.0
One-off effects	in EUR m.	-3.4	-6.7	-6.1	-6.9
EBIT before one-off effects	in EUR m.	44.2	49.6	42.5	53.9
EBT	in EUR m.	40.8	41.7	35.9	46.2
Earnings after tax	in EUR m.	26.0	25.5	22.5	30.4

 

Rounding errors may arise.


Notes to the "Earnings by Business Segment" chart

(1) Photofinishing: 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 or lenses in Norway, Sweden, Poland, the Czech Republic and Slovakia.
(3) Commercial online printing: Production and sale of the commercial print products of the online printing portals, e.g. CEWE-PRINT.de, Saxoprint and Viaprinto

 

Overall year of 2016 in a comparison with the previous year and with targets, and the targets for 2017

CEWE Group	Unit	2015	2016 target	2016 actual	2017 target
Digital prints	in billion units	2.16	2.05-2.15	2.18	2.08-2.18
Prints from films	in billion units	0.071	0.050-0.055	0.056	0.040-0.045
Total prints	in billion units	2.23	2.10-2.21	2.23	2.12-2.23
CEWE PHOTO BOOK	in m. units	6.0	6.10-6.15	6.2	6.00-6.25
Turnover	in EUR m.	554.2	555-575	593.1	585-615
EBIT	in EUR m.	36.4	40-46	47.0	45-51
EBIT margin	%	6.6	6.9-8.3	7.9	7.3-8.7
EBT	in EUR m.	35.9	39-45	46.2	44.5-50.5
Earnings after tax	in EUR m.	22.5	29-33	30.4	30-34
Earnings per share diluted	EUR/share	3.15	4.00-4.57	4.25	4.23-4.81

 

 

Fourth quarter in 2016

CEWE Group	Unit	Q4 2015	Q4 2016	Diff. %	Diff. abs.
Digital prints	in m. units	761.2	768.0	0.9 %	6.8
Prints from films	in m. units	14.5	11.5	-20.7 %	-3.0
Total prints	in m. units	775.7	779.5	0.5 %	3.8
CEWE PHOTO BOOK	in m. units	2.4	2.4	-0.4 %	-0.01
Turnover	in EUR m.	215.8	228.5	5.9 %	12.7
EBIT	in EUR m.	40.8	42.9	5.3 %	2.2
EBT	in EUR m.	40.8	41.7	2.2 %	0.9
Earnings after tax	in EUR m.	26.0	25.5	-1.7 %	-0.4

 

Rounding errors may arise. Percentage deviations have all been calculated at the exact values.

Should you have any queries, please contact:
CEWE Stiftung & Co. KGaA, Axel Weber (Investor Relations)
Tel.: 0441 / 404 - 2288, Fax: 0441 / 404 - 421, Email: IR@cewe.de

Internet: cewe-fotobuch.de , cewe-photobook.com , cewe.de , cewe-print.de , viaprinto.de , saxoprint.de , deindesign.de

The CEWE apps are all available in the app stores: CEWE PHOTO WORLD, CEWE POSTCARD, CEWE SERVICE and other photo apps, and the CEWE Investor Relations app for iPad(c) or android tablets, with annual reports and quarterly reports, presentations and sustainability reports.

Financial schedule:
(insofar as already scheduled)

29 March 2017 Bankhaus Lampe Deutschland Conference, Baden-Baden
11 May 2017 Publication of the 2017 Q1 interim report
31 May 2017 2017 Annual General Meeting, Weser-Ems-Halls, Oldenburg
10 August 2017 Publication of the 2017 H1 mid-year report
10 November 2017 Publication of the 2017 Q3 interim report

About CEWE: The innovative photo and online print service company CEWE, with twelve highly-technical production operations and a staff of around 3,500 employees in 24 European countries, is both market and technological leader. In 2016 CEWE delivered around 2.2 billion prints, 6.2 million copies of the CEWE PHOTO BOOK and photo gift articles to around 25,000 retail partners to generate consolidated turnover of 593.1 million euros. CEWE is continuously generating new impulses in the photographic industry with innovations for people who enjoy taking photos. In the new business segment of commercial online printing, printed material for businesses is marketed through the sales platforms CEWE-PRINT.de, Saxoprint und Viaprinto. Founded in 1961 by Senator h. c. Heinz Neumüller, CEWE was taken to the stock exchange by Hubert Rothärmel in 1993. CEWE Stiftung & Co. KGaA is listed on the SDAX.