November 13, 2018

Cewe reports strong 3rd quarter

After a solid sales and earnings performance in the 3rd quarter, the European imaging service and online printing provider Cewe has confirmed its earnings forecast for 2018: Compared with the same period 2017, group sales rose by Euro 6.9 million (5.3 percent) to Euro 137.2 million in the third quarter, while the operational last year’s result (Euro 3.6 million).

“In the first three quarters of the year, we not only handled the continued seasonal shift to the fourth quarter”, said Cewe CEO Dr. Christian Friege. ”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.“

Since the earnings contribution of the important Holiday quarter has increased year on year for twelve years now, Cewe confirmed its full year forecast: EBIT is expected in the range of Euro 48 to 54 million in 2018, with Group revenues rising to Euro 630 to 665 million. In the financial year 2018, EBT is expected to in the range of Euro 47.5 million to Euro 53.5 million, with after-tax earnings reaching Euro 33 to 37 million.

The core business, which was affected by the hot and long summer, was more than compensated for by the Cheerz acquisition. Overall, photofinishing generated sales of Euro 100.4 million in the third quarter, an plus of 4.3 percent year-on-year. The branded products Cewe Wall Decoration and Cewe Calenders showed strong volume growth, while the number of Cewe Photobooks, with 1.32 million pieces, was slightly lower than in the 3rd quarter of 2017 (1.36 million) due to the order-unfavorable weather conditions and the continued seasonal shift in the fourth quarter. While the acquisition of Cheerz resulted in a (planned) negative earnings contribution, the photofinishing EBIT declined to Euro 3.1 million (Q3 2017: Euro 4.1 million). The trend towards high-quality photo products continued unabated: in the third quarter, sales per photo rose by 8.0 % year-on-year to 19.55 cents (Q3 2017: 18.11 cents).

Reaching Euro 23.9 million, sales of the commercial online printing busienss increased by 18.2 percent during the third quarter, mainly due to the acquisition of Laserline. Despite the continued Brexit-induced decline in business in the United Kingdom and persistently strong price pressure in domestic competition, the division also recorded a slight organic increase in sales. Including the expected negative EBIT contribution from Laserline, the Commercial Online Printing business segment posted a negative EBIT of Euro -0.9 million in the third quarter (Q3 2017: Euro 0.4 million). In addition to the integration costs for Laserline, higher paper prices as well as higher personnel costs also affected the result. Cewe expects Laserline to make a positive contribution to the Group’s EBIT from 2019.

In retailing, Cewe continues to focus on photo-finishing products and high-quality, high-margin premium cameras, deliberately avoiding low-margin hardware sales. For this reason, retail sales declined to Euro 11.8 million in the third quarter (Q3 2017: Euro 13.0 million). Despite lower sales, EBIT reached at the same level as the previous year at Euro -0.1 million, while retail sales of photofinishing products are reported in the company’s photofinishing business.

Cewe’s capital ratio was an extremely sound 54.8 percent as of September 30m 2018 (30 September 2017: 57.0 percent). The return on capital employed (ROCE) fell from 19.3 percenbt to 15.1 percent, mainly due to the acquisitions of Saxopark, Cheerz and Laserline, that raised the capital employed and, as a result, reduced Cewe’s ROCE. "Our sound financial situation and our high earning power make it possible for us to continue to develop our business segments in future”, commented Dr. Olaf Holzkämper, CFO of Cewe. ”Our staff, our customers and not least of all our shareholders, whom we wish to continue to offer increasing dividends, benefit from this development.“

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