CEWE Stiftung & Co. KGaA — Call Transcript 2021

Aug 10, 2021

Results Q2 2021 Analyst Conference Call

CEWE Stiftung & Co. KGaA

August 10, 2021

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.

Agenda

1. Corporate Development by Business Segments

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

2. Group Results

• 3. Financial Details
• 4. Outlook

5. Q&A-Session

CEWE Photo Award: The world's largest photo competition with a record number of 606,289 photos submitted from over 170 countries

Soy Sauce making

Azim Khan Ronnie (Bangladesh)

Winner Category "Aerial Photos "

Rainy Season

Hartmut Schwarzbach (Germany)

Winner Category "People"

Turtle Watch

Siegfried Claeys (Belgium)

Winner Category "Travel & Culture"

Egg Phone

David Weimann (Germany)

Winner Category "Cooking & Food"

Red Image

Hans Lahodny (Austria)

Winner Category "Hobby & Leisure"

Frozen Lighthouse

Manfred Voss (Germany)

Winner Category "Landscapes"

Little Dandelion Umbrella

Petra Jung (Switzerland )

Winner Category "Nature"

The Clan cuddles

Josef Schwarz (Germany)

Winner Category "Animals"

Street Football

Andreas Bauer (Germany)

Winner Category "Sport"

PR-Clippings: CEWE Photo Award 2021

16

CEWE after H1 with a head start in earnings vs. 2020

Changes of Corona-lockdowns and -easings impact demand behavior

Even if negative on group level: Photofinishing business segment (in contrast to typical CEWE seasonality) with EBIT of 9.8 million euros – the best Photofinishing-EBIT in the company's history

Business Segments PF: Photofinishing COP: Commercial Online-Print RT: Retail

Increase in demand

Decrease in demand

Rounding differences may occur.

Results Q2: Photofinishing as expected weaker, COP improved

• Photofinishing is developing weaker in Q2 than in a normal non-corona year: With the first Corona easings in Q2, people catch up on things that were not possible in lockdown and order fewer photo products. Turnover decreased by -15.4% to 93.6 million euros, EBIT is reduced accordingly to -5.6 million euros.
• Commercial Online-Print benefits from the Corona easings in Q2 with sales growth and significantly improved earnings. The optimized production and cost structure sustainably improves the earnings situation. Turnover increased by 25.8% to 13.7 million euros, EBIT improved by 2.6 million euros to -0.2 million euros.
• Hardware Retail improves results in Q2 with optimized point-of-sale-structure: Despite 40 shops less turnover reached previous year's level with 7.6 million euros. EBIT improved by 2.9 million euros to -0.3 million euros (mainly due to restructuring costs in the previous year).
• In total, the growth in sales in Commercial Online Print cannot virtually offset the decline in Photofinishing, with Group turnover, at 116.7 million euros, falling short of that of the previous year by -10.6%. The Group EBIT is reduced accordingly to -6.4 million euros, driven by the core business segment of photofinishing.

1.1 Photofinishing

CEWE honored twice with TIPA World Award for the first time

TIPA World Award for CEWE Calendar A2 Gold Edition

TIPA World Award for CEWE Photo Center

TIPA World Award for RoomView Function

10 TIPA World Awards for CEWE and WhiteWall

New products: Cooperation with Faber-Castell

Faber-Castell colored pencils in an individual photo metal case from CEWE

Vaccination @ CEWE

CEWE Poland

CEWE Eschbach WhiteWall

CEWE is a great place to work

Number of prints and turnover Photofinishing Q2

30

After a long time first Corona easings in Q2: people catch up on things that were not possible in the lockdown and order fewer photo products (and even less multi-photo-products) Turnover per photo increases with + 6.2%

Number of prints and turnover Photofinishing H1

• Q2 decline in demand also visible in the first half of the year: people catch up on things that were not possible in lockdown and order fewer photo products
• Turnover per photo increases with + 6.0%

CEWE PHOTOBOOK Q2 and H1

• The extraordinary development in the Corona lockdown in Q2 of the previous year (catch up of many photo books, even with older image material) is not repeated, and (after a long time, the first) corona easings in the current Q2 reduced demand additionally
• Above all, the classic multi-photo product feels the temporary lack of images due to vacation restrictions

As expected, the previous year's extraordinary development in Photofinishing did not repeat

Photofinishing EBIT in Q2 in million euros

The first lockdown easing after a long time lead to an additional decline in demand and earnings in Photofinishing

Business Segment Photofinishing Q2

in Euro millions

Q2 photofinishing weaker than in a normal noncoronavirus year: as soon as coronavirus easing was implemented in Q2 people caught up with things they couldn't do in lockdown, hence ordering fewer photo products

▪ Last year customers used the time spent at home during the first lockdown to place orders, including orders for photo products from old photos taken some time ago ("clean-up-effect"). As expected this extraordinary development was not repeated in Q2 this year.

• On the contrary: The current easing of coronavirus restrictions (the first one in a long time) also dampened demand: people caught up with things they hadn't been able to do during lockdown and this resulted in fewer orders for photo products.
• Additionally (pre) Easter business this year was in Q1 (March) and not in Q2 (April) as last year. Nor was there much post-Easter business this year, since less travelling/fewer Easter holiday trips overall clearly meant that far less photo material was available to people.
• The decline in business resulting from the relaxing of coronavirus regulations led to a weaker photofinishing EBIT than in a "normal" non-coronavirus year prior to 2020
• Only remaining 0.4 million euros in social insurance payments in the form of short-time work allowances helped offset some of the personnel costs incurred without work performed (Q2 2020: 0.7 million euros)
• Q2 2021 special effects: 1.0 million euros
• − Effects resulting from the Cheerz purchase-price allocation: 0.5 m. euros
• − Effects resulting from the WhiteWall purchase-price allocation: 0.5 m. euros
• Previous-year special effects Q2 2020: 1.1 million euros
• − Effects resulting from DeinDesign purchase-price allocation: 0.1 m. euros
• − Effects resulting from Cheerz purchase-price allocation: 0.5 million euros
• − Effects resulting from WhiteWall purchase-price allocation: 0.5 million euros

Business Segment Photofinishing H1

in Euro millions

Switching between coronavirus lockdown and the easing of coronavirus restrictions has changed demand-related behaviour in Q1 and Q2 in comparison to the previous year and hence likewise the earnings situation

• In 2021, demand for photo products and as a result photofinishing sales is showing a completely different profile from the one in 2020: Q1 2020 was the last so far largely "normal" (non-corona) quarter, Q1 2021 on the other hand was a period strongly affected by the lockdown, just like Q2 in 2020. In contrast, the current Q2 2021 was impacted by easings of coronavirus regulations.
• While the ongoing lockdown situation in Q1 generated growing online business to significantly benefit the development of sales and earnings, in Q2, as soon as initial coronavirus lockdown easing began, people caught up with what had not been possible during lockdown, thus generally ordering fewer photo products.
• The Q1 rise in earnings in photofinishing was absorbed in Q2 due to the change in demand: EBIT declined to 4.1 million euros
• Only remaining 0.6 million euros in social insurance payments in the form of short-time work allowances helped to offset some of the personnel costs incurred without work performed (H1 2020: 0.7 million euros)
• H1 2021 special effects: -2.1 million euros
• − Effects resulting from the Cheerz purchase-price allocation: 1.0 million euros
• − Effects resulting from the WhiteWall purchase-price allocation: -1.1 million euros
• Previous year H1 2020 special effects: -2.2 million euros
• − Effects resulting from the DeinDesign purchase-price allocation: 0.2 m. euros
• − Effects resulting from the Cheerz purchase-price allocation: 1.0 million euros
• − Effects resulting from the WhiteWall purchase-price allocation: -1.0 million euros

Photofinishing-Turnover by Quarter

Estimated seasonal distribution: CEWE 2017 to 2021 – Share in turnover by quarter as a million

36

Photofinishing-EBIT by Quarter

Estimated seasonal distribution: CEWE 2017 to 2021 – EBIT by quarter in Euro million

1.2 Retail

Retail with focus on photofinishing business

• Own retail stores in NO, PL, CZ, SK
• Strategic focus on photofinishing and online business
• EUR 34.1 million revenue (2020) with photo-hardware (cameras, lenses, …)

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

Business Segment Retail* Q2 in Euro millions

Hardware retailing improves with an optimised store structure earnings in Q2

• Hardware retailing also benefited from coronavirus easing measures in the second quarter, achieving turnover at the same level as that of the previous year, at 7.6 million euros, in spite of having 40 stores fewer (corresponds to more than ¼ of the previous 140 stores)
• Due to a focus on photofinishing and online business and to refraining from low-margin hardware business, the active reduction in turnover before the onset of the coronavirus crisis was at around a strategic -10% to -15%
• The EBIT reported for retailing improved significantly by 2.9 million euros.
• In Q2 of the previous year, around 1.7 million euros in restructuring provisions and 1.5 million euros in allowances for inventories of stocks were accrued on the basis of the store structure optimisation announced
• Only remaining 0.2 million euros in social insurance payments in the form of short-time work allowances helped to offset some of the personnel costs incurred without any work being performed (Q2 2020: 0.8 million euros)
• Q2 2021 special effects: none
• Previous-year special effects Q2 2020: -3.2 million euros
• − Restructuring provisions for retailing: -1.7 million euros
• − Allowances for inventories of stocks: 1.5 million euros

Business Segment Retail* H1 in Euro millions

Hardware retailing improves with an optimised store structure earnings in H1

• In Q1, retailing saw sales dropping by 16.8%, as a result of the ongoing lockdown situation and in a comparison with the pre-coronavirus period. A focus on photofinishing and online business and refraining from low-margin hardware business actively reduced turnover before the onset of the coronavirus crisis by around a strategic -10% to -15%. In Q2, also against the background of coronavirus easing and in spite of around 40 stores fewer (corresponds to more than ¼ of the previous 140 stores), retailing also achieved turnover at the same level as in the previous year
• By that the retail segment can somewhat slow down the decline in sales in the first half of 2021 to -8.3%
• The EBIT reported for retailing improved significantly by 2.9 million euros
• In H1 of the previous year, around 1.7 million euros in restructuring provisions and 1.5 million euros in allowances for inventories of stocks were accrued on the basis of the store structure optimisation announced
• Only remaining 0.7 million euros in social insurance payments in the form of short-time work allowances helped to offset some of the personnel costs incurred without any work being performed (H1 2020: 0.9 million euros)
• H1 2021 special effects: none
• Previous year H1 2020 special effects: -3.2 million euros
• − Restructuring provisions for retailing: -1.7 million euros
• − Allowances for inventories of stocks: 1.5 million euros

1.3 Commercial Online-Print

Commercial Online-Print

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

Business Segment Commercial Online-Print Q2

in Euro millions

• COP benefits from the easing of coronavirus rules with increasing turnover

• The optimised production and cost structure is sustainably improving the earnings situation in COP

• Easing of coronavirus restrictions and the resulting revival of business life is seeing a rise in demand for printed advertising material. COP in B2B printing business has increased sales by 25.8% in comparison to the same quarter of the previous year which was clearly weakened by the coronavirus lockdown

• Thanks to this turnover and the optimised cost structure, COP improved its quarterly earning by a pleasing 2.6 million euros
• The ongoing strict cost management in conjunction with a generally more efficient production and cost structure back up this improvement in earnings
• Only remaining 0.3 million euros in social insurance payments in the form of short-time work allowances helped to offset some of the personnel costs incurred without any work being performed (Q2 2020: 0.8 million euros)
• Q2 2021 special effects: -0.1 million euros
• − Effects resulting from the Laserline purchase-price allocation: 0.1 million euros
• Previous-year special effects Q2 2020: -0.1 million euros
• − Effects resulting from the Laserline purchase-price allocation: 0.1 million euros

Business Segment Commercial Online-Print H1

The optimised production and cost structure is sustainably improving the earnings situation in COP

• in Euro millions In Q1, COP was strongly impacted by the coronavirus in a B2B printing business, with a 43.2 % drop in sales during lockdown in comparison to a virtually coronavirus-free first quarter in 2020. In Q2, the easing of coronavirus restrictions and the resulting revival of business life is perceivable and is seeing a rise in demand for printed advertising material: COP increased by 25.8% against the second quarter of 2020 which was weakened by the coronovirus lockdown
• The COP thus achieved a total turnover of 26.5 million euros in the first half of 2021 and reduced the accumulated decline in turnover to -20.8%
• The ongoing strict cost management in conjunction with a generally more efficient production and cost structure resulted in a clear improvement in earnings in the amount of 2.6 m. euros
• Remaining 0.9 million euros in social insurance payments in the form of short-time work allowances helped offset some of the personnel costs incurred without work performed (H1 2020: 0.9 million euros)
• H1 2021 special effects: 0.1 million euros
  • − Effects resulting from the Laserline purchase-price allocation: 0.1 m. euros
• Previous year H1 2020 special effects: -0.2 million euros
  • − Effects resulting from the Laserline purchase-price allocation: 0.2 m. euros

1.4 Other

Business Segment Other Q2

in Euro millions

Structural and corporate costs and profits arising from real estate property and company investments are shown in the "other" business segment.

• futalis continues to develop strongly and increases turnover in the other business segment by 28.5%
• The EBIT contribution of the segment is mainly due to the costs for the Annual General Meeting (in the previous year only in October) at EUR -0.3 million, around EUR 150 thousand less than in the previous year (Q2 2010: EUR -0.1 million)
• With a slightly positive result above the break-even level, futalis continues to make a very gratifying contribution to the segment result

Segment for Other business continues to increase turnover

Business Segment Other H1

in Euro millions

Structural and corporate costs and profits arising from real estate property and company investments are shown in the "other" business segment.

• futalis continues to develop strongly and increases turnover in the other business segment by 19.8%
• The segment's contribution to EBIT is slightly weaker than in the previous year, mainly due to the costs for the Annual General Meeting (last year only in October)
• With a slightly positive result above the break-even level, futalis continues to make a very gratifying contribution to the segment result

Segment for Other business continues to increase turnover

2. Group Results Q2 2021

Group Turnover Q2

in Euro millions

Photofinishing Commercial Online-Print Retail Other

• The extraordinary development in photofinishing last year was not repeated as expected; easing of restrictions additionally reducing demand and turnover
• COP turnover clearly raised and retailing at the same level as last year

Rounding differences may occur.

Photofinishing Commercial Online-Print Retail Other

Q2 decline in turnover in photofinishing also perceivable at a Group level in H1

2017 2018 2019 2020 2021

Q2 Group EBIT: corona-driven decline in photofinishing earnings greater than improvement in earnings in COP and retail

With a head start in Q3: Group EBIT in H1 better by 1.1 million euros than in the previous year

3. Financial details

Consolidated income statement Q2

Figures in millions of euros	Q2 2020	% Turnover	Q2 2021	% Turnover	∆ as %	∆ as m€	(+) Commercial Online-Print and Retail
Turnover	130.6	100.0%	116.7	100.0%	-10.6%	-13.8	(-) Photofinishing (extraordinary development 2020 + Corona easing 2021)
Increase / decrease in finished and unfinished goods	0.1	0.1%	0.0	0.0%	62%	-0.1
Other own work capitalised	0.4	0.3%	0.3	0.2%	-33%	-0.1	(+) Release of provisions for allowances, sale of fixed assets
Other operating income	4.2	3.2%	6.3	5.4%	48.7%	2.1	(+) Income from recyclable residual production materials
Cost of materials	-33.5	-25.7%	-31.5	-27.0%	-6.1%	2.0
Gross profit	101.7	77.9%	91.8	78.7%	-9.7%	-9.9	(+) Business-driven reduction
Personnel expenses	-43.4	-33.3%	-45.0	-38.5%	-3.5%	-1.5	(+) Allowances for inventories in retail in the previous year
Other operating expenses	-45.4	-34.8%	-40.4	-34.6%	11.1%	5.0
EBITDA	12.9	9.9%	6.5	5.5%	-49.8%	-6.4	(-) Exercise of stock option program, tariff adjustm., less short-time work
Amortisation/Depreciation	-13.8	-10.6%	-12.9	-11.1%	6.8%	0.9	(+) Reductions in Commercial Online-Print and Retail
Earnings before interest, taxes (EBIT)	-1.0	-0.7%	-6.4	-5.5%	560%	-5.5

Rounding differences may occur.

(+) Business-driven decline (especially mail order costs)

(+) Restructuring provisions in Retail in the previous year

• CEWE with a very strong equity ratio of 59.8%
• Expiry of Corona-related liquidity aid and Corona-related fewer supplier liabilities reduce liabilities, while equity increases due to strong Christmas business of last year

Blue = Corona-related Rounding differences may occur. short-term provisions due to utilization through restructuring: -€ 2.2 m.

From Balance Sheet to Management Balance Sheet

Management-Balance Sheet at 30 June

Capital employed increases due to the corona-related increase in net working capital

Free cash flow Q2

Decrease of € 8.8 m. due to lower operating investments, lower cash outflows for consolidated shares and more inflows from investments in financial assets and the sale of property, plant and equipment

Rounding differences may occur.

• Corona-related postponements of income tax payments and the absence of positive effects from the special Corona economy in Q2 2020 reduce cash flow from operating activities by 42.9 million Euro
• Lower cash outflow from investing activities
• 58 Free cash flow in the second quarter fell by 34.1 million Euro as a result of various corona effects

ROCE

Above all, earnings development of the 2020 Christmas business increases ROCE to 20.3%

* ROCE = EBIT / Capital Employed. Rounding differences may occur.

4. Outlook

Revenue e2021: CEWE should continue to grow

61

EBIT development: e2021

in Euro millions

H1 with a head start confirms CEWE Group Targets 2021

CEWE Group Targets 2021

Targets		PY 2020	Target 2021	Change in %
1 Photos	billion photos	2.34	~2.3 to ~2.4	-2 to +3
CEWE PHOTO BOOK	millions	6.52	~6.4 to ~6.7	-2 to +3
Operational Investments 2	Euro millions	35.6	~48
Revenue	Euro millions	727.3	710 to 770	-2 to +6
EBIT	Euro millions	79.7	72 to 84	-10 to +5
EBT 3	Euro millions	76.4	70 to 82	-8 to +7
4 Earnings after tax	Euro millions	51.9	48 to 56	-8 to +7
Earnings per share	Euro	7.20	6.60 to 7.73	-8 to +7

1 The number of photos is the sum of the images with which CEWE photo products were designed and refers to all images that are used in value Rounding differences might occur. -added products (e.g. CEWE PHOTOBOOK, CEWE CARDS, CEWE CALENDAR, CEWE WALL PICTURES and other photo gifts)

2 Outflows from investments in property, plant and equipment and intangible assets, netted against inflows from the sale of property, plant and equipment and intangible assets; without acquisitions/company acquisitions 3 Without subsequent valuations of equity instruments

4 Based on the normalized group tax rate of the previous year

»The ranges of these 2021 targets reflect the uncertainty that is currently arising from the pandemic and potential effects on CEWE's business development

5. Q&A-Session Analyst Conference Call Q2 2021