Cewe Color confirms 2012 sales and earnings forecast

Due to the unbroken increase in Cewe photo book sales (+12.8%) and other digital added value products, the photofinishing segment reported an increase of EUR 1.1 million, to EUR 71.5 million. These effects have both clearly more than compensated for the decline in turnover in the retail segment in the amount of EUR 0.6 million, to EUR 25.4 million. As analysts had expected, the seasonal shift, which has continued for several years, and a slight drop in retail profits in the second quarter resulted in a decline of EUR 0.6 million in EBIT (Q2 2011: + EUR 0.7 million). Due to the slight rise in the fixed cost basis for the peak in sales in the fourth quarter, the three first quarters – with weaker sales – will be negatively affected by these advance payments in terms of profits.

Against this background, Cewe Color is presuming that the company will earn around 90% of its annual EBIT target (EUR 27 to 33 million) in the fourth quarter of 2012. CEO Dr. Rolf Hollander commented: "The first six months see us clearly on track with our targets for 2012, namely to generate turnover of more than EUR 500 million and to achieve our earnings targets. The high growth rates for online printing and the Cewe photo book are a clear confirmation of our strategic direction and will reinforce our growth in coming years as well."

In the second quarter, the overall number of photos increased by 1.2% over the figure for 2011, to 525.4 million photos. This is mainly due to the sustained success of the Cewe photo book, with sales increasing by 12.8%, to 1.095 million books. The trend to digitisation continues unchanged: as many as 92% of all the photos produced are now digital photos (Q2 2011: 87%), and around 69% of all the photos produced are ordered online (Q2 2011: 63%).

In the online printing segment, Saxoprint GmbH, a company acquired in February 2012, markedly drove up its growth in sales in the second quarter over sales generated in the same period of the previous year. "The outstanding performance of online printing has fully met expectations and achieved EUR 10 million in sales in the second quarter. We are thus convinced that in 2012 we will generate at least EUR 40 million in turnover in our new segment," Dr. Hollander said.

On the basis of the second quarter, the Board of Management is confirming all the annual targets for the 2012 business year: the new segment for online printing is to considerably boost growth by around EUR 40 million and raise Group turnover in the range of 7% to 12%, from EUR 500 million to EUR 525 million. After adjustment by the contribution to sales of the new online printing business segment, the management predicts a slight average increase in sales to around EUR 460 million to EUR 485 million (-1.9 % to +3.4 %), While the total number of photos in the photofinishing sector is declining slightly, probably by around 2.29 to 2.36 billion photos, the management nevertheless continues to expect growth in the sale of Cewe photo books, by around 11 to 15%, to range between 5.7 million and 5.9 million photos. Investments in 2012 are expected to remain in the range of EUR 30 to 33 million (-1% to +9%) and EBIT is to amount to around EUR 27 to 33 million (-10% to +10%). The average of this range is thus the same as in the 2011 business year. Since the management does not expect online printing, at turnover of around EUR 40 million, to contribute notably to earnings, an EBIT margin of 5.6% to 7.2% – an average of 6.4% – results on the basis of photofinishing sales (2011: 6.4%). Earnings per share are likely to reach around EUR 2.44 to EUR 3.06.