- Period up to mid-year 2017 on target
- At 234.6 million euros sales at virtually the same level as in the previous year (HY1 2016: 236.0 million euros)
- Mid-year EBIT at -0.4 million euros (HY1 2016: -0.5 million euros)
- Added-value products increase turnover
- Capital ratio increases to 62.4%, ROCE rises to 20.5%
CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) is on track to reach its targets for 2017 after the first six months of the year: With Group turnover at 234.6 million euros (HY1 2016: 236.0 million euros) and EBIT at -0.4 million euros (HY 2016: - 0.5 million euros), the Board of Management is confirming its forecast for the full year. In spite of the increase in value added tax for photo books, Group turnover in 2017 is to rise slightly on average (585 million euros to 615 million euros). Group EBIT is to be in a corridor of 45 to 51 million euros, EBT in the range of 44.5 to 50.5 million euros, and after tax earnings between 30 and 34 million euros. In a 12-month perspective (1 July 2016 to 30 June 2017), which also includes the fourth quarter, a typically very strong season, CEWE achieves EBIT in the amount of 47.0 million euros, and is thus within the forecast range for the full year of 2017. At the same time, account must also be taken of the fact that the fourth quarter of 2016 included impairment-related depreciation of 6.9 million euros, which is unlikely to occur again to this extent. "We are not unhappy with the first half-year period - especially since we are comparing it with an extremely strong first half-year period in 2016. We countered the negative effect on demand resulting from the increase in value-added tax for photo books with additional expenditure for marketing and recorded a noticeable Brexit effect in commercial online printing. Growth in sales of our added-value products and the resulting renewed increase in turnover per photo have to a large extent compensated for these negative influences, so we are on track to reach our targets for the full year of 2017," says Dr. Christian Friege, Chairman of the Board of Management of CEWE Stiftung & Co. KGaA.
Photofinishing: Strong brand added-value products compensate
for effects of value-added tax
The business segment of photofinishing has confirmed the positive result for the previous year: In the first six months of 2017, with turnover increasing by 0.7% to 167.7 million euros, CEWE generated EBIT in the amount of 1.6 million euros (HY1 2016: 0.5 million euros). Operative EBIT before one-off effects amounts to 1.3 m. euros, and is thus at around the same level as in the strong previous year (adjusted operative EBIT for HY1 2016: 1.4 million euros). In the first six months of 2016, photofinishing turnover had already increased by 12.5% and EBIT had already improved by as much as 3.4 million euros. In the first six months of 2017, added-value products in particular, such as CEWE WALL PICTURES, mobile phone covers and other photo gifts, generated growth in turnover which more than compensated for the decline in sales of the CEWE PHOTO BOOK, which was probably also partly due to the value-added tax. The trend towards these added-value products once again clearly raised the value per photo by 8.0% to 19.46 cents, which meant that the photofinishing turnover also increased somewhat overall. "Our CEWE brand products are continuing to grow and are benefiting from our investments in a better brand awareness," Christian Friege emphasises. The enhanced brand awareness was also a good starting point to the fourth quarter, which typically generates almost all the annual profits.
Brexit puts a brake on commercial online printing
Brexit-related drops in demand and in the currency in the UK saw turnover in the business segment of commercial online printing, at 40.5 million euros, falling short by 1.6% of the same figure for the previous year (41.1 million euros). Adjusted by this effect, commercial online printing achieved a slight increase of around 1%. The EBIT was reduced, mainly because of the drop in turnover, to -0.2 million euros (HY1 2016: +0.8 million euros). Christian Friege: "Since Brexit has had an effect for a year as of July 2017, the impact on the second half of the year is likely to be manageable. The European online printing market essentially remains just as attractive and our position is a very good one. We thus continue to expect our annual net income for 2017 to be positive. Even if the development in the first half of the year fell short of our expectations, we must essentially allow the development from offline to online printing the time it needs to make the shift.
Retailing: Focus on increased margin products
In the "retailing" business segment, CEWE has reduced turnover by focussing on products with a higher margin, as it has done in the past few years. This is why, in spite of turnover being reduced by 8.3% to 25.0 million euros, the sector achieved a slightly improved EBIT (-375,000 euros), which was practically at the same level as in the previous year (-400,000 euros). "This year, Christmas business will once again be decisive for retail earnings, since cameras, lenses, bags and other photo hardware products are typical Christmas gifts. With the break-even point having almost been reached in the first six months of the year, we are on target in this area too," explains CEO Dr. Friege. CEWE retailing is also an important sales channel for photofinishing products, which CEWE reports in the business segment of photofinishing.
CEWE soundly financed and with ROCE continuing to rise
With its capital ratio at 62.4% as at 30 June 2017 (30 June 2016: 56.8%), CEWE is soundly financed. At -0.6 million euros, the cash flow from operative business was close to being balanced, and ROCE increased from 19.7% in the previous year to 20.5% as at 30 June 2017.