CEWE Stiftung & Co. KGaA — Call Transcript 2020

May 12, 2020

Results Q1 2020 Analyst Conference Call

CEWE Stiftung & Co. KGaA

May 12, 2020

This presentation contains forward-looking statements that are based on current assumptions and forecasts of the management of CEWE. Known and unknown risks, uncertainties and other factors could lead to material differences between the forward-looking statements given here and the actual development, in particular the results, financial situation and performance of our Company. The Company assumes no liability to update these forward-looking statements or to conform them to future events or developments.

All numbers are calculated as exactly as possible and rounded for the presentation. Due to this, rounding differences might occur.

CEWE acts with clear priorities in Corona crisis

• We focus on health and safety of our employees 1
• We secure production capabilities of our laboratories and printing plants
• We keep online and mobile sites up and communicate with our customers
• We ensure cost reductions and review investments
• We prepare the re-start of Retail and Commercial Online-Print
• We seek "Corona-upsides"

2

3

4

5

6

Means to tackle the Corona crises have been implemented and continuously updated

• Photofinishing: With 13 production plants all over Europe, CEWE is able to digitally route customer orders to other production sites to produce and ship from there
• Shifts are separated from each other to limit a default risk. In the administrative area functions were separated and relocated accordingly. If possible, CEWE employees are working from home. Nearly all meetings are carried out by video conference. So far, there is a group-wide visitor and travel stop.
• Emphasis on online ordering and mail home delivery as long as POS are closed
• Commercial Online-Print: Strengthening of SAXOPRINT's cost leadership at production site in Dresden
• Retail: Development of sales support (incl. technological improvements) to promote reopening
• Sourcing of supply products and materials is continuously ensured
• Program to reduce costs, (precautionary) registration of short-time work and re-evaluation of all investment projects

With its long term strategic perspective CEWE seems well prepared: CEWE = stability

Crisis management CEWE acted quickly, courageously and with clear priorities Strong team All 4,200 CEWE employees are committed to coping with the crisis Solid financial foundation Strong balance sheet (cash position and equity ratio) Diversified portfolio Photo products in the consumer business are more independent of current shutdowns than business print Omnichannel provider Even if shops are closed, most CEWE photo products can still be ordered online for all consumers, and delivery is also direct to your home

Stay-at-home effect Customers can use the time at home to create photo products

In Q1, Corona effects visible but managed and, all in all, they counterbalance each other: Q1 results as last year

At a glance: Q1 2020

• Turnover in Photofinishing rose by 10.8% to EUR 114.7 million, EBIT improved by EUR 0.3 million to EUR 3.3 million. Sales of the CEWE PHOTOBOOK increased by 2.2% to 1.36 million copies. Due to corona, instant printing in the retail store is declining; online business is growing due to the onset of the "stay-at-home" effect.
• Commercial Online-Print is significantly affected by the corona crisis from mid-March, turnover at EUR 22.6 million is 10.5% below the previous year's level. Accordingly, the EBIT of EUR -0.8 million is around EUR 0.4 million weaker than in the previous year.
• The corona shutdown with store closures in March hits (Hardware-)Retail, turnover declines by 27.5% to EUR 7.5 million. Due to the good start in January and February, Retail ended the first quarter with an EBIT of EUR -0.5 million just EUR 0.1 million weaker than previous year.
• Group EBIT is EUR 1.8 million (Q1 2019: EUR 2.3 million), including an additional EUR 0.5 million burden from the purchase price allocation of WhiteWall that did not exist in the previous year. All in all a good first quarter.

Agenda

1. Corporate Development by Business Segments

• 1.1 Photofinishing
• 1.2 Retail
• 1.3 Commercial Online-Print
• 1.4 Other

2. Group Results Q1 2020

3. Financial Details

4. Q&A

1.1 Photofinishing

TIPA World Awards for CEWE PHOTOBOOK and WhiteWall

Success Factor: "Innovation"

Success Factor: CEWE's omni-channel solution

Number of prints and turnover Photofinishing Q1

Rounding differences may occur.

• Rising share of value-added-products increases turnover per photo
• WhiteWall supports increase of turnover per photo

CEWE PHOTOBOOK with growth in Q1

• First, shock freezing at shutdown start mid March reduced growth in Q1
• Then, "stay-at-home" effect kicked in when people got self-organized with the new situation

Photofinishing-Turnover by Quarter

Seasonal distribution: CEWE 2016 to 2020 – Share in turnover by quarter as a million

Photofinishing turnover in Q1 is even clearly within range of pre-corona perspective* for 2020

* due to corona situation no targets can be set for 2020 so far

15

** group turnover w/o segments retail, commercial online-print and other

Business segment Photofinishing Q1

in Euro millions

• Very decent results in Photofinishing in Q1
• Stay-at-home effect with increasing online business overcompensates decrease in POS direct print business due to corona-shutdown

▪ Photofinishing grew by a strong 10.8% in Q1 2020, the acquired wall art specialist WhiteWall was contributing to this growth

▪ From mid-March, the corona pandemic also affected the photofinishing business: immediate business decline at the kiosk systems and other POS orders, later "stay-at-home effect" visible with good order intake in the online photofinishing business

• Photofinishing EBIT grew by 0.3 million euros in Q1 2020 coping with 0.5 million euros depreciation from the purchase price allocation of WhiteWall (which did not accrue in the previous year)
• Q1 2020 special effects: -1.1 million euros
• − PPA effects from DeinDesign purchase price allocation: -0.1 million euros
• − PPA effects from Cheerz purchase price allocation: -0.5 million euros
• − PPA effects from WhiteWall purchase price allocation: -0.5 million euros
• PY Q1 2019 special effects: -0.6 million euros
• − PPA effects from DeinDesign purchase price allocation: -0.1 million euros
• − PPA effects from Cheerz purchase price allocation: -0.5 million euros

Photofinishing-EBIT by Quarter

Seasonal distribution: CEWE 2016 to 2020 – EBIT by quarter in Euro million

Photofinishing turnover in Q1 is even clearly within range of pre-corona perspective* for 2020

* due to corona situation no targets can be set for 2020 so far

17

** group EBIT w/o targets of segments retail, commercial online-print and other.

1.2 Retail

CEWE´s retail business

• 147 retail stores
• EUR 43.7 million revenue (2019) with photo-hardware (cameras, lenses, …)

• Sales of photofinishing products in photofinishing segment

• Retail segment contains hardware revenue only, photofinishing revenue is shown in photofinishing segment

• Own retail business provides an excellent window to the market

Business segment Retail* Q1

in Euro millions

• Hardware retailing is severely affected by the shutdown as of March due to corona-related closings and loses -27.5% in sales in Q1 2020: EUR 7.5 million (Q1 2019: 10.4 million euros)
• By focusing on the photofinishing business and abandonment of low-margin hardware business, the drop in sales until the end of February was around 15% and in line with the strategy

EBIT *

Hardware business affected by corona-shutdowns

▪ At EUR -0.5 million, EBIT is only slightly weaker than in the same quarter of the previous year (Q1 2019: -0.4 million euros) as until the end of February Retail was ahead of previous year

* only hardware, no photofinishing Rounding differences may occur.

1.3 Commercial Online-Print

The CEWE online print brands

Business and advertising prints: flyers, business cards, stationery, packaging, promotional items, etc.

Business segment Commercial Online-Print Q1

in Euro millions

Since mid March, COP is affected by Coronasituation in a B2B environment

• Since mid March, COP is under strong Corona influence in the B2B printing business and loses 10.5% in Q1 2020 sales
• Accumulated at the end of February 2020 turnover in COP increased with single digit growth rate
• As a result of the Corona-related decline in sales, the EBIT in COP also fell short of the previous year's result
• Q1 2020 special effects: -0.1 million euros
• − PPA effects from Laserline purchase price allocation: -0.1 million euros
• PY Q1 2019 special effects: -0.2 million euros
• − PPA effects from Saxoprint purchase price allocation: -0.1 million euros
• − PPA effects from Laserline purchase price allocation: -0.1 million euros

Rounding differences may occur.

1.4 Other

Business Segment Other Q1

in Euro millions

Segment for other business raises turnover and improves earnings slightly

Rounding differences may occur.

2. Group Results Q1 2020

Turnover Q1 in Euro millions

+4.1% fx-adj.: +4.3% target: +2% to +6%

Photofinishing overcompensates Corona-driven decrease in other segments

EBIT Q1 in Euro millions

Photofinshing with EBIT increase in Q1, COP and Retail affected by corona-shutdowns

3. Financial details

Consolidated profit and loss account Q1

Figures in millions of euros	Q1 2019	Q1 2020	∆ as %	∆ m€	Increase of turnover in Photophinishing exceeds
Revenues	139.2	144.8	4.1%	5.7	corona driven decrease in segments Commercial
Increase / decrease in finished and unfinished goods	-0.2	-0.7	-234%	-0.5	Online-Print and Retail
Other own work capitalised	0.2	0.2	51.3%	0.1
Other operating income	4.6	5.8	25.7%	1.2	(+) Exchange rate gains
Cost of materials	-38.4	-36.5	4.9%	1.9
Gross profit	105.3	113.7	7.9%	8.3	(+) Cost of material primarily in Retail and
Personnel expenses	-44.2	-47.7	-8.0%	-3.5	Commercial Online-Printing
Other operating expenses	-46.2	-50.6	-9.5%	-4.4
EBITDA	15.0	15.4	2.8%	0.4	(-) Acquisition of WhiteWall
Amortisation/Depreciation	-12.7	-13.6	-7.4%	-0.9	(-) Wage increases in 2019
Earnings before interest, taxes (EBIT)	2.3	1.8	-22.7%	-0.5
Financial income	0.0	0.0	-44.4%	0.0	(-) Acquisition of WhiteWall
Financial expenses	-0.3	-0.3	3.5%	0.0	(-) Exchange rate losses
Financial result	-0.2	-0.3	7.2%	0.0	(-) Mailorder costs
Earnings before taxes (EBT)	2.1	1.5	-26.2%	-0.5

Rounding differences may occur.

Balance Sheet at 31 March

• Acquisition of WhiteWall causes increase in the balance sheet total
• Equity ratio strong at 54.0%, w/o IFRS 16 even at 61.4%

From Balance Sheet to Management Balance Sheet

Management-Balance Sheet at 31 March

Net working capital negative due to lower trade receivables reflecting effects of Corona crisis in late March

Capital employed I: T-12

Figures in millions of euros	Mar 31, 2019	Mar 31, 2020	∆ as %	∆ as m€
Property, plant and equipment	218.2	212.1	-2.8%	-6.1	(+) Acquisition of WhiteWall
Investment properties	17.5	17.2	-1.9%	-0.3	(-) Scheduled depreciation
Goodwill	59.7	77.8	30.2%	18.0
Intangible assets	27.4	37.1	35.4%	9.7	(+) Goodwill WhiteWall
Financial assets	7.0	6.2	-12.1%	-0.9
Non-current financial assets	1.3	1.3	0.8%	0.0	(+) Acquisition of WhiteWall
Non-current other receivables and assets	0.2	0.1	-75.2%	-0.2	(-) Scheduled depreciation
Deferred tax assets	12.1	14.0	15.6%	1.9
Non-current assets	343.4	365.6	6.4%	22.1	(+) From temporary differences: Pension accruals
					(+) From tax losses carry forward
Inventories	45.4	44.0	-3.1%	-1.4
+ Current trade receivables	42.0	34.8	-17.2%	-7.2	(+) Acquisition of WhiteWall
= Operating gross working capital	87.4	78.8	-9.8%	-8.6	(-) Decline of stocks in Retail
- Current trade payables	53.4	55.4	-	2.0
= Operating net working capital	34.0	23.4	-31.3%	-10.6	(-) Corona driven decrease in segments
					Retail and Commercial Online-Print

Rounding differences may occur.

(+) Acquisition of WhiteWall

Capital employed II: T-12

Figures in millions of euros	Mar 31, 2019	Mar 31, 2020	∆ as %	∆ as m€
Assets held for sale	0.0	3.1	-	3.1	(+) futalis
+ Current receivables from income tax refunds	7.2	6.2	-15%	-1.1
+ Current financial assets	2.8	3.4	21.2%	0.6	Capitalization of tax prepayments on
+ Other Current receivables and assets	10.4	12.2	17.2%	1.8	balance sheet date
= Other gross working capital	20.4	24.8	21.7%	4.4
- Current tax liabilities	8.1	7.3	-9.7%	-0.8	(+) Capitalization of prepaid expenses and
- Current other accruals	4.3	6.4	49.2%	2.1	deferred charges (esp. IT projects)
- Current financial liabilities	10.2	8.5	-16.6%	-1.7
- Current other liabilities	28.4	31.9	12.1%	3.4	(+) Restructuring provision Laserline
- Liabilities held for sale	0.0	0.5	-	0.5
= Other net working capital	-30.6	-29.7	-2.9%	0.9	(-) Variation of put und call options
					by valuation and execution
Operating net working capital	34.0	23.4	-31.3%	-10.6
- Other net working capital	-30.6	-29.7	-2.9%	0.9	(+) Personnel liabilities (holiday, bonus)
= Net working capital	3.4	-6.4	-289%	-9.8	(+) Wage tax and VAT
Non-current assets	343.4	365.6	6.4%	22.1
+ Net working capital	3.4	-6.4	-289%	-9.8	(+) Acquisition of WhiteWall
+ Cash and cash equivalents	13.1	19.0	45.1%	5.9	(+) Non cash-poooling subsidiaries
= Capital employed	359.9	378.2	5.1%	18.3

Rounding differences may occur.

Capital invested: T-12

Figures in millions of euros	Mar 31, 2019	Mar 31, 2020	∆ as %	∆ as m€
Equity	254.9	263.5	3.4%	8.6	(+) Result
Non-current accruals for pensions	29.6	35.9	21.4%	6.3	(-) Dividend payments
+ Non-current deferred tax liabilities	3.3	3.4	2.4%	0.1
+ Non-current other accruals	0.4	0.4	5.3%	0.0	(+) Actuarial valuation
+ Non-current financial liabilities	1.6	1.9	19.7%	0.3
+ Non-current other liabilities	0.6	0.5	-22.1%	-0.1	(+) Acquisition of WhiteWall
= = non operating liabilities	35.4	42.0	18.6%	6.6	(-) Rental payments decrease remaining
Non-current interest-bearing financial liabilities	1.0	1.0	-1.0%	0.0	payments, net, increased by new rental
+ Non-current leasing liabilities	53.5	48.6	-9.1%	-4.9	contracts
+ Current interest-bearing financial liabilities	5.9	12.9	120%	7.0
+ Current leasing liabilities	9.2	10.1	9.8%	0.9	(+) Operational given increase of financial
= brutto financial debt	69.6	72.7	4.4%	3.1	liabilites
= Capital Invested	359.9	378.2	5.1%	18.3

Rounding differences may occur.

Free cash flow Q1

Cash Flow is stable: Slight EBITDA-improvement counterbalanced by slightly higher investments

Average capital employed increases to 389.3 million euros through IFRS 16 and WhiteWall acquisition Positive development of earnings keeps ROCE before IFRS 16 and restructuring very sound at 18.9%

6. Q&A-Session

Analyst Conference Call Q1 2020