CEWE Stiftung & Co. KGaA — Call Transcript 2022

Nov 11, 2022

Results Q3 2022 CEWE Stiftung & Co. KGaA

Analyst Conference Call November 11, 2022

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 Commercial Online-Print
• 1.3 Retail
• 1.4 Other

2. Group Results

• 3. Financial Details
• 4. Outlook

5. Q&A-Session

CEWE in Q3 with strong growth and significantly improved EBIT: Targets 2022 confirmed – perfectly positioned for X-mas business

• At 151.4 million euros, Group turnover in Q3 is +14.3% above PY.
• All business units reported growth in the third quarter.
• Group EBIT improves by strong 3.1 million euros to 1.1 million euros in Q3.
• Targets 2022 are confirmed.
• Ahead of the important Christmas business CEWE is perfectly positioned and prepared.

CEWE is perfectly positioned and prepared for X-mas business

Large stock of images at customers again

With Corona normalization and especially increased travel activity in 2022, customers again have a large pool of new images for ordering photo products as Christmas gifts.

2 3 New product innovations and X-mas campaign

CEWE introduces numerous product innovations for the Christmas business and launches probably the most comprehensive marketing X-mas campaign 2022.

Delivery capability is guaranteed

CEWE stocked up on all the necessary material at an early stage and comprehensively in order to be well equipped for the upcoming Christmas business.

CEWE increased product prices in order to compensate for cost increases.

The price adjustment will support the seasonal focus of the Christmas business in particular.

Stable in a weak economy 4 5 6

CEWE has repeatedly proven in the past that the company is typically not affected by a downturn in general consumer spending.

Customers with focus on quality are emotionally attached to photo products as Christmas gifts.

Onset of "cocooning" could support business

As surveyed by "pilot Radar" in a recent market research study, people mention their family environment or circle of friends most frequently, when asked what gives them confidence in these times.

CEWE awards "Supplier Sustainability Award 2022"

• »As part of the Photopia photo trade fair in Hamburg, CEWE presented the "Supplier Sustainability Award 2022" to Deutsche Post DHL and the Schiettinger Group.
• »With this award, CEWE recognizes the commitment of its partners and signals the importance of a sustainable supply chain – from material procurement to shipping.

Photofinishing

Analyst Conference Call November 11, 2022

Innovations @ CEWE

Focus of innovations that have led to a continuous flow of new products in recent years:

• 1. The comprehensive strengthening of the CEWE brand as a photofinishing brand, also through the CEWE PHOTO AWARD, now the world's largest photo competition.
• 1. The multi-brand strategy with the brands Pixum, DeinDesign, WhiteWall and Cheerz, which cover additional market segments. 2
• 1. The consistent orientation towards "mobile phones" as an order channel: No photofinisher in Europe receives more orders directly from cell phones. 3
• 1. The establishment of MAIC, the "Mobile and Artificial Intelligence Center," to bundle knowledge and findings on artificial intelligence and implement applications. Last year, CEWE received the prestigious EISA award for the resulting mobile app. 4

2022 Premium Product Innovations

XXL Advent Calender with Tony's Chocolonely

Photo-Advent Calendar with poster collage

Desk Calendar Nature 100% Recyced Paper incl. Wooden Stand

CEWE PHOTOBOOK Small Square

CEWE PHOTOBOOK with leather & linen cover and gloss photographic paper

Premium book templates for the CEWE PHOTOBOOK

CEWE PHOTOBOOK Kids with specially designed book templates

CEWE PHOTOBOOK Personalised Slipcase XL

100% Recycled Paper for all Hardcover Formats

Premium Photopuzzle 500 & 1000 Pieces

NEW: Environmentally friendly & waterbased print

Photo Magnet Retro

NEW: Trend product as extension of the profitable Photo Magnet portfolio

Photo Keychains NEW: Photo Keychains out of flexible, black leatherette

2022 X-mas Campaign: TV-Spot Advent Calendar

21

2022 X-mas Campaign: TV-Spot Photo Calendar

2022 X-mas Campaign: TV-Spot CEWE PHOTOBOOK

100.4 116.2 110.4 106.3 120.2 2018 2019 2020 2021 2022 Turnover Photofinishing in Euro millions 19.55 21.14 23.26 23.16 23.23 2018 2019 2020 2021 2022 Value per photo Turnover / photo (Euro cent / photo) 514 550 ^{475 459} 517 2018 2019 2020 2021 2022 Total prints in millions Number of prints and turnover Photofinishing Q3 +0.3% +13.0% +12.6% Target 2022: -7% to +4%

»Corona normalization enables photo opportunities (esp. travel, celebrations, …) and occasions for photo product orders again: Photo volume and turnover increase significantly

»Turnover per photo increases again

Number of prints and turnover Photofinishing Q1-3

»"Stay-at-home" effects with a particularly positive impact on demand in the Corona special years 2020 (here especially in Q2) and 2021 (here especially in Q1) make year-on-year comparability difficult »Turnover per photo increases encouragingly compared to the last pre-Corona period in 2019

CEWE PHOTOBOOK Q3 and Q1-3

• »On the way towards "back to normal": Corona normalization and above all return of international vacation trips cause demand for CEWE PHOTO BOOKS to continue to increase significantly in Q3 (however, longdistance travel photo books not yet back)
• »Also accumulated growth again, but not yet back to pre-Corona level: The classic multi-photo product still feels the Coronarelated temporary lack of images

+2.4% Target 2022: -7% to +4%

Business Segment Photofinishing Q3

in Euro millions

»Significant growth in Q3, Q3 turnover even exceeds last pre-Corona Q3 in 2019 »EBIT in Q3 improves by a strong 3.2 million euros

• Photofinishing turnover increased significantly by +13.0% under the influence of the continuing Corona normalization. In particular, the high activity in the vacation travel sector is generating a large number of new photo images and is prompting consumers to order more photo products.
• In addition, implemented price increases support the turnover growth and provide additional contribution margins.
• With the turnover now achieved, FF is also growing nicely by +3.3% compared to the last pre-Corona Q3 in 2019.
• Photofinishing EBIT improves by a strong +3.2 million euros due to demand and prices.
• Only social security payments in the form of short-time allowances amounting to 40 thousand euros were made (Q3 2021: 343 thousand euros short-time allowances).
• Further price increases will generate additional contribution margins, especially in the important Christmas business in the fourth quarter of 2022.
• Special effects Q3 2022: -0.9 million euros
• − Effects from purchase price allocation of Cheerz: -0.4 million euros
• − Effects from the purchase price allocation of WhiteWall: -0.5 million euros
• Special effects Q3 2021: -1.0 million euros
• − Effects from the purchase price allocation of Cheerz: -0.5 million euros
• − Effects from the purchase price allocation of WhiteWall: -0.5 million euros

Business Segment Photofinishing Q1-3

in Euro millions

»Photofinishing also accumulated with growth again »Earnings shortfall from Q1 (Corona special boom in previous year) further reduced

• Q1 still with expected decline in turnover (-9.9% due to special economic situation caused by "stay-at-home" effect in Q1 of previous year), Q2 and Q3 with significant increase in turnover: In Q2 (+8.2%) and Q3 (+13.0%), photofinishing turnover increases under the impression of the continuing Corona normalization. In particular, the strong vacation travel activity generates many new photo images and makes consumers order more photo products. In addition, implemented price increases support turnover growth and provide additional contribution margins.
• With the turnover now achieved, Photofinishing is also up +5.1% compared to the last pre-Corona period in 2019.
• The Q1 earnings shortfall (-7.3 million euros compared to Q1 of the previous year with Corona special boom) is reduced to -2.8 million euros with good Q2 and Q3.
• In this context, only 217 thousand euros in social security benefits in the form of short-time allowances partially compensated for the personnel costs incurred without work performance (Q1-3 2021: 909 thousand euros).
• Mainly due to the naturally increased cost structure compared to 2019 (also in preparation for the always increasing Christmas business), the current EBIT is thereby below the last pre-Corona EBIT from 2019 (2.6 million euros). Further price increases will generate additional contribution margins, especially in the Christmas business in the fourth quarter.
• Special effects Q1-3 2022: -2.8 million euros
• − Effects from the purchase price allocation of Cheerz: -1.3 million euros
• − Effects from the purchase price allocation of WhiteWall: -1.6 million euros
• Special effects Q1-3 2021: -3.1 million euros
• − Effects from the purchase price allocation of Cheerz: -1.5 million euros
• − Effects from the purchase price allocation of WhiteWall: -1.6 million euros

Photofinishing-Turnover by Quarter

254 to 281

Photofinishing-EBIT by Quarter

Seasonal distribution: CEWE 2018 to 2022 – EBIT by quarter in Euro million

30

Commercial Online-Print

Analyst Conference Call November 11, 2022

Commercial Online-Print

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

Business Segment Commercial Online-Print Q3

in Euro millions

• »COP benefits from (post-Corona) recovery and increases turnover and earnings
• »Lower break-even level: Although turnover has not yet returned to pre-Corona levels, higher earnings are

• 33 Rounding differences may occur. already being achieved

• COP continues to benefit from the ongoing "Corona normalization" in Q3 and significantly increases turnover with the "best price strategy".

• This still leaves COP below the pre-Corona revenue level from Q3 2019 (EUR 24.8million), but ...
• ... shows strongly improved result and overall lower break-even level mainly due to optimized cost structure vs. Q3 2019 (EBIT -0.8 million euros).
• The growth in turnover and continued strict cost management also improved EBIT compared with the previous year.
• Special effects Q3 2022: -0.1 million euros
• − Effects from the purchase price allocation of Laserline: -0.1 million euros
• Special effects Q3 2021: -0.1 million euors
• − Effects from the purchase price allocation of Laserline: -0.1 million euros

Business Segment Commercial Online-Print Q1-3

in Euro millions

• »COP benefits from (post-Corona) recovery and increases turnover and earnings
• »Lower break-even level: Although turnover has not yet returned to pre-Corona levels, higher earnings are

• 34 Rounding differences may occur. already being achieved

• KOD benefits from the ongoing Corona normalization and significantly increases in turnover with the "best price strategy" (Q1 2022: +38.8%; Q2 2022: +52.5%; Q3 2022: +28.4%).

• This still leaves COP below the pre-Corona revenue level from Q1-3 2019 (EUR 75.1 million), but ...
• ... shows strongly improved result and overall lower break-even level mainly due to optimized cost structure vs. Q1-3 2019 (EBIT -2.3 million euros).
• The increase in turnover and continued strict cost management also improved EBIT compared with the previous year.
• The COP fully compensated for social security payments received last year in the form of short-time working allowances amounting to 688 thousand euros (EBIT Q1-3 2021 without short-time working allowances: -1.7 million euros; Q1-3 2022: no short time work).
• Special effects Q1-3 2022: -0.2 million euros
• − Effects from the purchase price allocation of Laserline: -0.2 million euros
• Special effects Q1-3 2021: -0.2 million euros
• − Effects from the purchase price allocation of Laserline: -0.2 million euros

Retail

Analyst Conference Call November 11, 2022

Retail with focus on photofinishing business

• 101 own retail stores in NO, PL, CZ, SK
• Strategic focus on photofinishing and online business
• EUR 31.2 million revenue (2021) with photo-hardware (cameras, lenses, …)

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

Business Segment Retail* Q3 in Euro millions

»Retail well positioned with optimized store structure

• Retail also continues to benefit from the ongoing Corona normalization and increased hardware turnover in Q3.
• By focusing on the photofinishing business and refraining from low-margin hardware business, the active reduction in turnover before the onset of the Corona crisis was around -10% in line with business strategy.
• Also looking at retail against the last pre-Corona Q3 in 2019, it has significantly reduced hardware turnover with reduced store footprint by a good 30% in line with strategy ...
• ... while defending the earnings level (Retail-EBIT Q3 2019: 0.1 million euros).
• Due to seasonal factors, Q3 EBIT in Retail is traditionally usually slightly negative (Q3 2021: EUR -18 thousand; Q3 2022: EUR -79 thousand)
• Retail fully compensated for social security payments in the form of short-time working allowance in the amount of 65 thousand euros received in the previous year's quarter (EBIT Q3 2021 without short-time working allowance: -0.1 million euros; Q3 2022: no short time work).
• Special effects Q3 2022: none
• Special effects Q3 2021: none

Business Segment Retail* Q1-3

in Euro millions

»Retail well positioned with optimized ▪ Special effects Q1-3 2021: none store structure

• Already in Q1 2022, retail was able to increase its turnover by +4.0% with the Corona normalization, and this positive development continued in Q2 with +4.4% and in Q3 with +2.5%: In the first nine month, retail is up +3.6%.
• Looking also at retail against the last pre-Corona Q1-3 in 2019, it has significantly reduced hardware turnover with reduced store footprint by a good 40% in line with strategy ...
• ... while still improving the earnings situation (Retail-EBIT Q1-3 2019: -0.8 million euros).
• EBIT in retail also improved year-on-year.
• Retail fully compensated for social security payments in the form of short-time working allowance in the amount of 734 thousand euros received in the previous year (EBIT Q1-3 2021 without short-time working allowance: -1.5 million euros; Q1-3 2022: no short time work).
• Special effects Q1-3 2022: none

Other

Analyst Conference Call November 11, 2022

Business Segment Other Q3

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 2.2 million euros in turnover is exclusively attributable to futalis (Q3 2021: 1.9 million euros).

EBIT

			0.3
-0.7	-0.3	-0.2		-0.1
2018	2019	2020	2021	2022

▪ In the previous year's Q3 EBIT, the reversal of a provision of EUR 0.3 million for a potential property tax back payment for Saxopark in Dresden had a particularly positive effect on earnings.

»Business segment "Others" further increases turnover

Business Segment Other Q1-3

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 EUR 6.2 million in turnover is exclusively attributable to futalis (Q1-3 2021: EUR 5.6 million)

EBIT

				0.0
-1.7	-1.5	-0.5	-0.2
2018	2019	2020	2021	2022

▪ The segment's EBIT contribution improves mainly due to better income from real estate holdings compared to the previous year.

»Business segment "Others" increases turnover and improves earnings

Group Results

Analyst Conference Call November 11, 2022

»Turnover growth in all business segments in Q3

»Turnover growth in all business units also in the first nine months

-3.7 -2.0 -1.7 -1.5 -0.5 -0.8 -0.8 -3.7 -3.6 -2.3 -5.0 2.2 2.6 8.6 0.1 -1,6 -0.7 -0.3 -0.3 0.3 -0.1 -0.1 -0.1 -0.1 0.0 -0.1 1.8 -0.8 -0.2 0.2 2.6 0.2 -2.1 1.1 2018 2019 2020 2021 2022 0.1 -1,6 -0.7 -0.3 -0.3 0.3 -0.1 -0.1 -0.1 -0.1 0.0 -0.1 1.8 -0.8 -0.2 0.2 2.6 0.8 0.2 -2.1 1.1 2018 2019 2020 2021 2022 Q3 Q1-3 -1.7 -2.1 Photofinishing Commercial Online-Print Retail Other -0,5 1.1

»PF and COP drive Q3 earnings improvement compared to previous year's quarter »Best Q3 Group EBIT in the last 5 years

»Group EBIT after nine months better than in pre-Corona years 2018 and 2019

Financial Details

Analyst Conference Call November 11, 2022

Consolidated income statement Q3

Figures in millions of euros	Q3 2021	% Turnover	Q3 2022	% Turnover	∆ as %	∆ m€
Revenues	132.4	100%	151.4	100%	14.3%	19.0	(+) Continued corona normalization brings both COP (+ 28.4 %)
Increase / decrease in finished and unfinished goods	0.2	0.2%	-0.2	-0.1%	-	-0.4	as well as FF (+ 13.0%) strong growth
Other own work capitalised	0.3	0.2%	0.7	0.5%	121%	0.4
Other operating income	6.2	4.7%	6.5	4.3%	5.1%	0.3	(-) Increases in material costs due to price and volume increases
Cost of materials	-37.1	-28.0%	-43.3	-28.6%	16.7%	-6.2
Gross profit	102.1	77.1%	115.1	76.1%	12.7%	13.0
Personnel expenses	-44.9	-33.9%	-47.2	-31.2%	5.3%	-2.4	(-) General wage and salary increases and increased number of FTE
Other operating expenses	-45.9	-34.7%	-53.5	-35.3%	16.5%	-7.6
EBITDA	11.3	8.5%	14.4	9.5%	27.3%	3.1
Amortisation/Depreciation	-13.4	-10.1%	-13.3	-8.8%	-0.4%	0.1	(-) Increase in IT costs for licenses and third-party programming
Earnings before interest, taxes (EBIT)	-2.1	-1.6%	1.1	0.7%	-	3.1	(-) Selling expenses increased, particularly in advertising activities
Financial income	0.0	0.0%	0.0	0.0%	22.2%	0.0	(-) Higher (unrealized) exchange rate losses
Financial expenses	-0.5	-0.4%	-0.4	-0.2%	-23.6%	0.1
Financial result	-0.5	-0.4%	-0.4	-0.2%	-24.4%	0.1
Earnings before taxes (EBT)	-2.5	-1.9%	0.7	0.5%	-	3.3

Rounding differences may occur.

Balance Sheet at 30 September

Liabilities

»Equity ratio rises to a very solid 58.6%

From Balance Sheet to Management Balance Sheet

Management-Balance Sheet at 30 September

»Higher business volume and absence of Corona special effects increase NWC and, together with real estate, capital employed by 20 million euros

• »"Back to normal" – operating cash flow increases by € 8.8 m. due to rising earnings, increasing liabilities in working capital and non-repetition of Corona-related tax payments caught up in the prioryear quarter
• »Further purchase price payment for Hertz increases cash outflow from investing activities by € 0.9 m.
• »Q3 free cash flow increases by € 8.0 m.

ROCE at September 30

»Stronger than in pre-Corona times: ROCE at 16.7%

»Decline in 12-month EBIT (Corona-strengthened results from Q4-2020 and Q1-2021 in particular are part of previous year's numbers at Sept. 30, 2021) causes ROCE to fall compared to PY

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

Outlook

Analyst Conference Call November 11, 2022

Q3 further catches up for lockdown-related shortfall from Q1 vs. 2021 and confirms 2022 EBIT target

Comparison with Q4 EBIT development of previous years

»The consistently positive Q4 EBIT development of recent years makes the EBIT target range appear very achievable

Targets 2022 confirmed with Q3: CEWE on long term growth path

Targets 2022 confirmed with Q3

EBIT in Euro millions

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 e2022

Targets confirmed with Q3: CEWE Group Targets 2022

Targets		PY 2021	Target 2022	Change
1 Photos	billion photos	2.18	2.0 to 2.3	-7% to +4%
CEWE PHOTO BOOK	millions	5.65	5.4 to 5.8	-4% to +3%
Operational Investments 2	Euro millions	36.8	60
Revenue	Euro millions	692.8	680 to 740	-2% to +7%
EBIT	Euro millions	72.2	65 to 80	-10% to +11%
EBT 3	Euro millions	72.7	62 to 77	-15% to +6%
Earnings after tax 4	Euro millions	48.9	42 to 52	-14% to +6%
Earnings per share	Euro	6.77	5.89 to 7.32	-13% to +8%

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-added (CEWE PHOTOBOOK, calendars, wall art, greeting cards, etc.) 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 range of the 2022 EBIT target reflects the uncertainty that is currently arising from the pandemic and also from general price increases.

CEWE assumes that the company will not be directly affected by the war in the Ukraine, neither on the procurement nor on the sales side.

At this point, CEWE's planning for 2022 does not take into account any effects – e.g. on consumer behavior – of the war in Ukraine extending in terms of time and/or space.

Q&A-Session

Analyst Conference Call November 11, 2022