Business News

CEWE with growing earnings in 2014 as well

Wednesday 26. March 2014 - - Earnings per share higher than ever before in 2013 - Photofinishing earning power reinforced again in 2013 - Online printing increases by almost 40% in 2013 - New business segment of online printing to generate turnover of more than 100 million euros by 2016 - Income for 2014 expected to rise by 10%

CEWE Stiftung & Co. KGaA (SDAX, ISIN: DE 0005403901) is aiming for more earnings-oriented growth in 2014 as well. From an earnings point of view, the Board of Management expects income to exceed the targets for 2013 by around 3 million euros. The continued increase in the earning power of photofinishing business is contributing the advance payments for expansion in the promising, high-growth segment of online printing. CEWE is endeavouring to have the shareholders participate in the positive development of the company by way of an increased dividend for the current business year as well. This was announced by CEWE during the Annual Report Press Conference held today in Frankfurt am Main. Following the successful business year of 2013, in which CEWE achieved or exceeded its targets, the Board of Management and the Supervisory Board will be proposing a dividend increase to 1.50 euros a share for the 2013 business year to the shareholders participating in the Annual General Meeting on 4 June – the fifth dividend increase in succession. In 2013, with turnover at 528.6 million euros (+4.2%), CEWE achieved a new record high and raised EBIT to 29.4 million euros (+1.0%). Without the restructuring costs for the operations in Dresden and Graudenz, EBIT would have improved by 12.3% to 32.7 million euros. Earnings before tax (EBT) increased by 3.5% to 27.8 million euros in 2013. Earnings after tax , at 21.6 million euros, also clearly exceeded the target corridor of 16 to 20 million euros, one of the reasons being the change in the legal form of the company, and earnings per share (undiluted), at 3.29 euros, was higher than ever before in the history of the company (target corridor: 2.44 to 3.06 euros). Thanks to the positive earnings trend in the business area of photofinishing, in which the adjusted operative earnings were increased to 39.5 million euros, CEWE more than compensated for the negative non-recurring effect from depreciation of goodwill in the amount of 2.7 million euros.
Adjusted photofinishing EBIT rises to 39.5 million euros
With turnover at 367.7 million euros, the business segment of photofinishing added 2.4% to its turnover for the previous year (2012: 359.3 million euros), and comfortably exceeded its turnover target of up to 365 million euros. In the seasonal focus, the fourth quarter, alone, turnover rose by more than 10% to 145.3 million euros (Q4 2012: 132.0 million euros). The contribution to turnover in the fourth quarter rose over that of the previous year, from 37.2% of the total annual turnover for photofinishing to 39.5?%, thus again confirming the trend towards a seasonal shift to the fourth quarter. This trend also applies for the CEWE PHOTO BOOK. With full-year growth at 3.4% to 5.8 million books, the increase in fourth-quarter sales was above-average at 6.0% to 2.2 million books, thus accounting for a share of almost 39% of the annual volume. Against the background of a rising proportion of added-value products in the product mix, the average turnover for all photos rose by 6.4%, from 14.60 eurocents per photo in the previous year of 2012 to 15.53 eurocents per photo in 2013. The earning power of the photofinishing business area even rose by as much as 12.7% to 36.3 million euros (previous year. 32.2 million euros). Adjusted by the restructuring costs for location mergers in Dresden and Graudenz (Poland) incurred in the amount of 3.3 million euros in the first six months of 2013, EBIT was even as high as 39.5 million euros before these non-recurring effects.
Online printing grows by almost 40 % – more than 100 million euro aimed for in the period up to 2016
Online printing turnover rose by 40% to around 60 million euros in 2013. CEWE is thus well on the way to reaching its target turnover of 100 million euros in this business segment by 2016. The weighting of the elements in this business area alone shifted against the original plans: growth in SAXOPRINT and CEWE online offset printing exceeds the growth achieved in digital printing. CEWE has thus reduced the goodwill of Diron, which was taken over in 2008 and resulted in the digital printing presence, by 2.7 million euros. Dr. Hollander: ‘This does not in any way change the potential of our online printing business area. We are not investing in goodwill; instead we are investing in equipment, in skills and in business. This all remains unchanged. The value now depends less on the name viaprinto, it is focused more on Saxoprint and CEWE PRINT.’ Goodwill accounts for a mere 7.7% in the CEWE balance sheet. CEWE has clearly more than compensated for the negative non-recurring effect of the depreciation with a positive photofinishing margin. Before the non-recurring effect resulting from the depreciation of goodwill as described above, the business segment of online printing improved its EBIT by 0.5 million euros to amount to -4.3 million euros (previous year of 2012: -4.8 million euros). In this case the fact that investments in marketing were only made as of August in 2012 must be taken into account; in 2013 investments in marketing were made throughout the year. The additional marketing expenses were fully borne by the increase in sales. CEWE expects online printing earnings to improve again in 2014.
Retailing contributes positively to the consolidated profit
The retailing business segment generated turnover in the amount of 101.0 million euros with cameras and hardware in the year of the report, thus – due to a generally problematic photo hardware retail climate – not quite reaching the same level as in the previous year: 105.0 million euros). In 2013, CEWE retail business contributed a total of 76,000 euros (previous year of 2012: 1.7 million euros) to the consolidated profit. The fact that retailing takes in a considerable volume of photofinishing orders must also be taken into account. By far the largest share of related income is allocated to the strategic business segment of photofinishing.
Outlook: 10% increase in earnings targeted
The Board of Management is aiming for a further clear increase in earnings, with a slight growth in turnover, even though the company is still continueing to make advance payments for opening up the promising market for online printing. ‘We are foregoing earnings potential in the short term, in order to raise our sustainable earning power,’ says Dr. Hollander. In 2014 the consolidated turnover in all the business segments is to increase slightly from 528.6 million euros to an average 525 to 540 million euros. For the high-margin sector of photofinishing, thanks to added-value products, the Board of Management is expecting turnover to be relatively stable. If possible, a potential decline in retailing turnover is to be more than offset by the expected increase in turnover generated by online printing. After 59.8 million euros in 2013, the management believes that an increase in online printing turnover to more than 70 million euros is possible in 2014. CEWE continues to set its sights on achieving the 100 million euro mark for online printing in 2016. The target corridors for profits in comparison to 2013 are all being set at an increase of 3 million euros for 2014. EBIT is to be in a corridor of 30 million to 36 million euros in 2014, EBT is to be between 28 million and 34 million euros and after tax earning between 19 million and 23 million euros. Earnings per share are to be in the range of 2.84 to 3.45 euros (2013:. 3.29 euros). At the same time the management is confirming its aim of consistently raising dividends in the coming years.