CEWE Stiftung & Co. KGaA — Call Transcript 2021

May 12, 2021

Results Q1 2021 Analyst Conference Call

CEWE Stiftung & Co. KGaA

May 12, 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

Good Start to 2021: Q1 with a Significant Increase in Earnings

• Turnover in the Photofinishing business segment increased by 9.0% to 125.0 million euros, and EBIT improved by a considerable 6.5 million euros to 9.8 million euros. On the one hand this is in line with the long-term trend towards a consistently stronger first quarter, and on the other hand, staying at home under the ongoing lockdown situation backs up this positive development.
• Commercial Online Printing remains clearly impacted by the ongoing lockdown, only achieving turnover of 12.8 million euros, 43.2% below that of the previous year. Thanks to a strict cost management system and optimised production and cost structures overall, the EBIT, at -0.6 million euros, was stabilised at last year's level.
• The ongoing lockdown also continues to impact hardware retailing, with turnover decreasing by 16.8% to 6.3 million euros. In spite of this decline in turnover, retailing, with an EBIT of -0.4 million euros in the first quarter, returns the same earnings as in the previous year.
• In total, the growth in sales in photofinishing virtually offsets the declines in the other business segments, with Group turnover, at 145.9 million euros, falling short of that of the previous year by only -0.4%. The Group EBIT improved significantly by 6.6 million euros to 8.6 million euros (driven by the core business segment of photofinishing). A good first quarter overall.

1.1 Photofinishing

Success factor "Innovation": Innovation Day ON AIR 2021

Success factor "Innovation": Innovation Day ON AIR 2021

CEWE acts in many dimensions of sustainability

Social commitment

• » CEWE donated 1.5 million euros to charity and local communities in 2020
• » CEWE fosters photo festivals and photo culture across Europe every year

Responsibility for employees

• » CEWE regularly issues employee shares
• » CEWE offers many programs to enhance the work life/family balance

"Ehrbarer Kaufmann"

» CEWE acts on basis of the CEWE-Customer Charter for responsible digitisation

CEWE rated by ISS (Institutional Shareholder Services)

CEWE recognized for the second time in a row by Deloitte, Wirtschaftswoche, Credit Suisse and BDI

Number of prints and turnover Photofinishing Q1

Growth in (increasingly online ordered) value-added products add to higher turnover per photo

CEWE PHOTOBOOK Q1

Number in thousands

• Corona-related changes in photography behavior reduced the number of (multi-photo product) CEWE PHOTOBOOK slightly
• Yet, in terms of turnover, the CEWE PHOTOBOOK increased in a mid-single-digit percentage range compared to previous year's Q1

Business Segment Photofinishing Q1

in Euro millions

• Trend towards stronger Q1 continues

• Ongoing lockdown situation with growing online business backs up this trend in turnover and earnings

• Photofinishing grew by a considerable 9.0% in Q1 2021

• Increase in turnover is in line with the long-term trend towards a consistently stronger first quarter, additionally the ongoing lockdown situation in 2021 backs up this positive development
• The same quarter of the previous year had remained unaffected by the coronavirus pandemic until around mid-March
• Photofinishing EBIT increased by outstanding 6.5 million euros
• Besides additional contributions to profits from the overall rise in sales, the cost-reduction programme initiated in the previous year of 2020 also improved the EBIT
• Q1 2021 one-off effects: -1.0 million euros
• − Effects from the Cheerz purchase-price allocation: 0.5 million euros
• − Effects from the WhiteWall purchase-price allocation: 0.5 million euros
• Q1 2020 one-off effects: -1.1 million euros
• − Effects from the DeinDesign purchase-price allocation: 0.1 million euros
• − Effects from the Cheerz purchase-price allocation: 0.5 million euros
• − Effects from the WhiteWall purchase-price allocation: 0.5 million euros

Photofinishing-Turnover by Quarter

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

Photofinishing turnover in Q1 clearly at upper end of targeted range

Photofinishing-EBIT by Quarter

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

Photofinishing EBIT in Q1 clearly above targeted range

²¹ Rounding differences may occur. * group EBIT w/o targets of segments retail, commercial online-print and other.

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* Q1

in Euro millions

In spite of the negative effect of the lockdown, retailing delivered the same Q1 operative earnings as in the previous year

• As a result of the ongoing lockdown situation, hardware retailing saw Q1 turnover declining somewhat more than it did in the trend before the coronavirus: due to a focus on photofinishing business and refraining from low-margin hardware business, the active reduction in turnover before the onset of the coronavirus crisis was already at around a strategic -10%
• In spite of this decline in turnover, retailing has generated earnings at the same level as those of the previous year (also thanks to a strict system of cost management)
• In this case, around 0.5 million euros in social insurance payments in the form of a short-time working allowance helped to offset some of the personnel costs incurred without any work being performed (Q1 2020: 0.04 million euros)
• Q1 2021 one-off effects: None
• Q1 2010 one-off effects: none

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 Q1

in Euro millions

Even though the COP in a B2B business environment remains particularly impacted by the coronavirus crisis, a strict cost management keeps control of earnings

• COP remains strongly impacted by the coronavirus in B2B printing business, losing 43.2% in turnover in the ongoing firstquarter lockdown
• In the previous year's quarter the coronavirus situation and severe declines in turnover only began in mid-March; the COP (before coronavirus) still grew at a single-digit rate until then
• In spite of heavy losses in sales, a strict cost management in conjunction with a generally more efficient production and cost structure is maintaining earnings at the same level as in the previous year.
• In this case, around 0.6 million euros in social insurance payments in the form of a short-time working allowance helped to offset some of the personnel costs incurred without any work being performed (Q1 2020: 0.1 million euros)
• Q1 2021 one-off effects: 0.1 million euros
• − Effects from the Laserline purchase-price allocation: 0.1 million euros
• Q1 2020 one-off effects: 0.1 million euros
• − Effects from the Laserline purchase-price allocation: 0.1 million euros

1.4 Other

Business Segment Other Q1

in Euro millions

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

▪ The 1.8 million euros in sales is to be exclusively allocated to futalis (Q1 2020: 1.6 million euros)

▪ EBIT mainly improved through futalis: futalis continues to grow most positively, with earnings slightly positive

Segment for Other business enhances turnover and slightly improves earnings

2. Group Results Q1 2021

in Euro million Turnover Q1

Photofinishing Commercial Online-Print Retail Other

Rounding differences may occur.

Photofinishing compensates Corona-driven decrease in turnover in other segments

1.3 1.4 3.0 3.3 0.1 -0.3 -0.4 -0.6 -0.6 -0.3 -0.5 -0.4 -0.5 -0.4 -0.5 -0.4 -0.3 -0.2 -0.1 2017 2018 2019 2020 2021 Photofinishing Commercial Online-Print Retail Other EBIT Q1 0.6 8.6 0.2 1.9 2.0 in Euro million

Group EBIT increases due to a significant increase in earnings in photofinishing in the first quarter, COP and retail at about the same (largely unaffected by Corona) level as last year

3. Financial details

Consolidated income statement Q1

in % of in % of ∆ as Euro Figures in million euros Q1 2020 Q1 2021 ∆ as % revenues revenues million
Revenues 146,4 100% 145,9 100% -0,5 -0,4%	(-) Growth in PF (+9.0%) compensated Corona-related
Increase / decrease in finished and unfinished goods -0,7 -0,5% -0,4 -0,2% 0,3 48,6% declines in RT and COP
Other own work capitalised 0,2 0,2% 0,3 0,2% 0,0 12,2%
Other operating income 5,9 4,0% 5,7 3,9% -0,2 -3,0%	(+) Material expense ratio declined in line with change in turnover structure
Cost of materials -37,0 -25,3% -33,1 -22,7% 3,9 10,6% PF  / RT  / COP 
Gross profit 114,8 78,4% 118,3 81,1% 3,6 3,1%
Personnel expenses -48,2 -32,9% -47,0 -32,2% 1,2 2,4% (+) Less employees in RT and COP
Other operating expenses -51,0 -34,9% -49,7 -34,1% 1,3 2,6% (-) Exercise of the stock option program
EBITDA 15,5 10,6% 21,6 14,8% 6,1 39,1%	(+) Social securities insurance benefits (short time work)
Amortisation/Depreciation -13,5 -9,2% -13,0 -8,9% 0,5 3,7%
Earnings before interest, taxes (EBIT) 2,0 1,4% 8,6 5,9% 6,6 329%
Financial result -0,3 -0,2% -0,3 -0,2% -0,1 -23,3% (+) Strict cost management
Earnings before taxes (EBT) 1,7 1,2% 8,3 5,7% 6,5 373%	(+) No business travelling due to ongoing Corona-situation

Rounding differences may occur.

Balance Sheet at 31 March

From Balance Sheet to Management Balance Sheet

36

Management-Balance Sheet at 31 March

Capital Employed increases due to establishment of liquid funds

Free cash flow Q1

• Customer payments already received in the Christmas season (mailorder business) and tax payments collected only in Q1 2021 did result in higher cashouts
• Purchase of remaining Cheerz shares in particular resulted in higher outflows of funds from inv. activities
• Free cash flow decreases in total by 22.2 million euros, as foreseen

ROCE Q1

Positive development in earnings raises ROCE to a strong 21.9 % (despite IFRS 16 Leasing Accounting since 2019)

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

4. Outlook

EBIT development: e2021

in Euro millions

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 Q1 2021