CEWE Stiftung & Co. KGaA — Call Transcript 2023

Nov 10, 2023

Results Q3 2023 Analyst Conference Call

CEWE Stiftung & Co. KGaA November 10, 2023

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.

A warm welcome – Yvonne Rostock CEO & Olaf Holzkämper CFO

Agenda

• (1) Group Results (2) Corporate Development by Business Segments
• (3) Financial Details
• (4) Outlook
• (5) Q&A-Session

With Q3 targets for 2023 confirmed

• At 157.8 million euros, Group turnover in Q3 is +5.8% above PY.
• Both Photofinishing and Commercial Online-Print reported growth in the third quarter.
• Group EBIT improves by 0.2 million euros to 1.2 million euros in Q3.
• Targets 2023 are confirmed.

Group company futalis carved out in accordance with IFRS 5; details of the carved-out values can be found in the charts for the "Other" segment

Turnover and earnings increased in Q1-3: 2023 targets confirmed

Group company futalis carved out in accordance with IFRS 5; details of the carved-out values can be found in the charts for the "Other" segment

• in Euro millions Group turnover increases significantly by 8.9% to 453.2 million euros (Q1-3 2022: 416.1 million euros). Group EBIT increases by 3.7 million euros and reaches 2.3 million euros (Q1-3 2022: - 1.4 million euros).
• ❖ Turnover in the Photofinishing business segment increases by strong 9.3% to 365.2 million euros, EBIT rises to 1.8 million euros.
• ❖ Commercial Online-Print continues to grow, achieving a turnover increase of 10.5% to 66.3 million euros. EBIT improves to 1.5 million euros.
• ❖ Hardware Retail continues to perform well, with turnover in accordance with strategy slightly down with -1.6% to 21.8 million euros and improved EBIT to -0.4 million euros.
• The targets for 2023 are reaffirmed.

3 Key business segments

* Reporting after carve-out of futalis in accordance with IFRS 5

Comparison with Q4 EBIT development of previous years

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

(Without futalis required EBIT-development in Q4 even 1,5 m€ lower: +2.6 m€ would lead to 82 m€ EBIT, -9.4 m€ would lead to 70 m€ EBIT.)

Results Q3: CEWE confirms targets for 2023

9

CEWE is very well positioned and prepared for X-mas business

Large stock of images at customers again

With increased travel activity in 2023, 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 again a most comprehensive marketing X-mas campaign 2023.

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.

Compensation for cost increases 4 5

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

Stable in a weak economy

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.

1

Photofinishing

Photography is back the way it was before the pandemic

Origin and number of photos in CEWE photofinishing sites in the period from January to August

CEWE is responsible CEWE Photo Award 2023

CEWE Photo Award 2023 - Impressions

CEWE Photo Award 2023

Once again the largest photo contest in the world

CEWE is responsible PHOTOPIA 2023: Driving the industry

CEWE GROUP: How we will continue to be successful

Innovative Strength CEWE PHOTOBOOK - Launches

CEWE PHOTOBOOK Personalized Slipcase XXL Portrait / XXL Landscape

Innovative Strength CEWE Photo Products - Launches

Innovative Strength CEWE Photo Products - Launches

New CEWE App calendar Editor Innovative Strength

Black and White now also in ultraHD Innovative Strength

WhiteWall technology Inhouse optimized sharpening

Sharpening perfected Matched to the respective output process

Increased production resolution

Ensures perfect results

Available as option in the configurator

AI-supported occasion recognition Innovative Strength

Innovative Strength

Exclusive Christmas design collection & new seasonal products

Retro advent calendar // Surprise cracker filled with photos & gifts // Christmas 'Big fat box'

Innovative Strength

Postal card with photo & video

1. Create your card

Bring maximum emotion to your loved ones by adding a video to your card!

2. Receive the card

Scan of the QR code integrated into the design provides quick access to the video, enough to delight your loved ones!

CEWE GROUP: How we will continue to be successful

2023 X-mas Campaign: CEWE PHOTOBOOK

2023 X-mas Campaign: Pixum

2023 X-mas Campaign: Cheerz

Business Segment Photofinishing Q3

in Euro millions

Turnover

0.8 0.2 -2.1 0.9 0.7 2019 2020 2021 2022 2023 116.2 110.4 106.3 120.2 128.7 2019 2020 2021 2022 2023 +7.1% EBIT

»Q3 turnover growth successfully compensates for the increased cost base (mainly due to inflation): earnings at previous year's level

• Photofinishing turnover continues to rise significantly by +7.1%. Around 5%-points came from price increases and around 2%-points from (demand-driven) volume growth.
• CEWE succeeds in converting the high level of vacation travel activity with new photo images among consumers into its own business growth through own marketing activities.
• This turnover growth compensates for the cost base, which has risen mainly due to inflation: at 0.7 million euros, Photofinishing EBIT is only slightly below the same quarter of the previous year (Q3 2022: 0.9 million euros).
• It should also be noted that in the same quarter of the previous year, the exercise of the share option program at a favorable price led to extraordinary income of EUR 0.3 million.
• Special effects Q3 2023: -0.8 million euros
• − Effects from the purchase price allocation of Cheerz: EUR -0.2 million
• − Effects from the purchase price allocation of WhiteWall: EUR -0.5 million
• − Effects from the purchase price allocation of Hertz: EUR -0.1 million
• Special effects Q3 2022: -1.1 million euros
• − Effects from the purchase price allocation of Cheerz: EUR -0.4 million
• − Effects from the purchase price allocation of WhiteWall: EUR -0.5 million
• − Effects from the purchase price allocation of Hertz: EUR -0.2 million

Business Segment Photofinishing Q1-3

in Euro millions

»Photofinishing significantly increases turnover and improves earnings

• Photofinishing turnover increased significantly by +9.3% in Q1-3. Around 6%-points came from price increases and around 3%-points from (demand-driven) volume growth.
• CEWE succeeds in converting the high level of vacation travel activity with new photo images among consumers into its own business growth through own marketing activities.
• Photofinishing EBIT thus improved by a strong +2.7 million euros due to volume and price factors.
• The visible increase in earnings from volume growth and price increases of +2.7 million euros was even reduced by an extraordinary provision for software licenses no longer required (-0.5 million euros). Without this special effect, the operating improvement amounts to +3.2 million euros.
• Special effects Q1-3 2023: -3.0 million euros
• − Effects from the purchase price allocation of Cheerz: EUR -0.7 million
• − Effects from the purchase price allocation of WhiteWall: EUR -1.6 million
• − Effects from the purchase price allocation of Hertz: EUR -0.2 million
• − Provision for software licences: EUR -0.5 million
• Special effects Q1-3 2022: -3.1 Mio. Euro
• − Effects from the purchase price allocation of Cheerz: EUR -1.3 million
• − Effects from the purchase price allocation of WhiteWall: EUR -1.6 million
• − Effects from the purchase price allocation of Hertz: EUR -0.3 million

Photofinishing-Turnover by quarter Seasonal distribution: CEWE 2019 to 2023 in M€

»Photofinishing turnover in Q3 at the upper end of the planned target range

Photofinishing-EBIT by Quarter

Seasonal distribution: CEWE 2019 to 2023 – EBIT by quarter in M€

»Photofinishing-EBIT in Q3-target range

³³ * Gruppen-EBIT ohne die Segmente Einzelhandelt, Kommerzieller Online-Druck und Sonstiges Es können sich Rundungsdifferenzen ergeben.

Number of prints and turnover Photofinishing Q3

»Photo volume and turnover per photo continue to increase and push up photofinishing turnover

Number of prints and turnover Photofinishing Q1-3

»Photo volume and turnover per photo continue to increase and push up photofinishing turnover

»Special effect slowly phasing out: In the (Corona) previous years, there was increased demand for wall prints or puzzles with high turnover per photo, for example, but now the share of individual prints (with comparatively lower turnover per photo) in the total photo volume is increasing again

CEWE PHOTOBOOK Q3 and Q1-3

• »While the classic multi-photo product was still feeling the temporary lack of images at the end of the pandemic years, mainly due to vacation restrictions (including little to no long-distance travel), the CEWE PHOTOBOOK is now picking up again after the pandemic
• » CEWE PHOTOBOOK turnover increases more than proportionately to volume growth, as demand for photobooks with more pages and larger formats is increasing in addition to the price increase

Commercial Online-Print

Commercial Online-Print

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

Business Segment Commercial Online-Print Q3 in Euro millions

EBIT Turnover +2.7% -0.8 -1.6 -0.2 0.2 0.7 2019 2020 2021 2022 2023 24.8 15.4 16.6 21.3 21.9 2019 2020 2021 2022 2023

COP continues to increase turnover and earnings with the "best price guarantee"

• COP turnover continues to grow in Q3. As expected, the slightly higher Q2 growth rate (+4.7%) is weakening, as the previous year's basis for comparison in 2022 is becoming continuously stronger over the course of the year.
• COP can significantly improve its EBIT by 0.5 million euros to 0.7 million euros (Q3 2022: 0.2 million euros).
• Cost efficiency in production and the (resulting) "best price guarantee" for its customers allow KOD to continue to grow profitably.
• In addition, the ratio of COP turnover to trading goods turnover has improved: greater added value through in-house production with a corresponding improvement in earnings.
• Special effects Q3 2023: -0.03 Mio. Euro
• − Effects from the purchase price allocation of Laserline: EUR -0.03 million
• Special effects Q3 2022: -0.06 Mio. Euro
• − Effects from the purchase price allocation of Laserline: EUR -0.06 million

Business Segment Commercial Online-Print Q1-3 in Euro millions

COP continues to increase turnover and earnings ⁻ Effects from the purchase price allocation of Laserline: EUR -0.2 million with the "best price guarantee"

• COP turnover continues to grow in Q1-3: an increase of 10.5%. As expected, the growth rate in Q3 weakened to +2.7% after +4.7% in Q2 and +26.6% in Q1, as the previous year's basis for comparison in 2022 becomes continuously stronger over the course of the year.
• COP can significantly improve its EBIT by a strong 1.5 million euros to 1.5 million euros (Q1-3 2022: 0.0 million euros).
• Cost efficiency in production and the (resulting) "best price guarantee" for its customers allow KOD to continue to grow profitably.
• In addition, the ratio of COP turnover to trading goods turnover has improved: greater added value through in-house production with a corresponding improvement in earnings.
• Special effects Q1-3 2023: -0.1 Mio. Euro
• − Effects from the purchase price allocation of Laserline: EUR -0.1 million
• Special effects Q1-3 2022: -0.2 Mio. Euro

Retail

CEWE Retail with focus on Photofinishing business

101 stationary photo retail stores in Scandinavia and Central Eastern Europe

E-commerce webshops sell hardware (cameras and accessories) and photo products from CEWE at the POS and on the Internet

Business Segment Retail* Q3 in M€

• Retail achieved a turnover slightly below the previous year's level in Q3 as it continues to focus on the Photofinishing business and the systematic elimination of low-margin hardware business.
• According to strategy, the active reduction in sales in the years before the onset of the coronavirus crisis was even around - 10%.
• EBIT, which is traditionally slightly negative in the third quarter due to the seasonal nature of the business, remained constant at -0.1 million euros.
• Special effects Q3 2023: none
• Special effects Q3 2022: none

Retail remains well positioned with optimized store structure

Business Segment Retail* Q1-3 in M€

Retail remains well positioned with optimized store structure

• Retail achieved a turnover slightly below the previous year's level in Q1-3 as it continues to focus on the Photofinishing business and the systematic elimination of low-margin hardware business.
• According to strategy, the active reduction in sales in the years before the onset of the coronavirus crisis was even around - 10%.
• EBIT, which is traditionally slightly negative in the first nine months due to the seasonal nature of the business, improved to -0.4 million euros
• Special effects Q1-3 2023: none
• Special effects Q1-3 2022: none

Business Segment Other Q3 in M€

46

Start of the futalis sales process

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

• The turnover of 2.1 million euros is attributable exclusively to futalis (Q3 2022: 2.2 million euros).
• Due to the sale process of futalis started in Q3, futalis is to be excluded from the Group income statement with immediate effect in accordance with IFRS 5.
• Without futalis, no turnover was generated in the Other segment (turnover Q3 2022 without futalis: 0.0 million euros).
• Including futalis, the EBIT contribution of the Other segment amounted to -0.4 million euros in the third quarter (Q3 2022: -0.1 million euros).
• Due to the increase in the cost of sales, futalis achieved an operating EBIT loss of -0.2 million euros (Q3 2022: -0.1 million euros).
• Excluding futalis, the EBIT contribution from the Other segment amounted to -0.2 million euros in the third quarter (Q3 2022: 0.0 million euros).
• Slightly higher Supervisory Board remuneration and lower earnings from real estate led to the slight decrease in earnings.

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 turnover of 6.7 million euros is attributable exclusively to futalis (Q1-3 2022: 6.2 million euros).
• Due to the sale process of futalis started in Q3, futalis is to be excluded from the Group income statement with immediate effect in accordance with IFRS 5.
• Without futalis, no turnover was generated in the Other segment (turnover Q1-3 2022 without futalis: 0.0 million euros).
• Including futalis, the EBIT contribution of the Other segment amounts to -2.1 million euros in the first nine months (Q1-3 2022: 0.0 million euros).
• Excluding futalis, the EBIT contribution of the Other segment amounts to -0.6 million euros in the first nine months (Q1-3 2022: 0.0 million euros).
• The futalis EBIT of EUR -1.5 million includes a machine write-down of EUR -0.8 million that became necessary as a result of the most recent impairment test.
• In addition, the remuneration for Supervisory Board members reported in this segment increased year-on-year and investor relations costs (due to the Annual General Meeting being held in person again for the first time since the coronavirus period) were higher than in the previous year. Start of the futalis sales process

Group Results

Group Turnover Q3

Reporting after carve-out of group company futalis in accordance with IFRS 5

»Growth in PF and COP leads to further increase in Group turnover in Q3

Group Turnover Q1-3

Reporting after carve-out of group company futalis in accordance with IFRS 5

Photofinishing Commercial Online-Print Retail Other

»Growth in PF and COP leads to further increase in Group turnover in first nine months

Group EBIT in Euro millions

Q3 Q1-3

»Q3 Group EBIT slightly better than in the previous year

0.3 -0.1 0.1 -1.4 2.3 -1.2 -0.5 0.2 0.0 0.6 -0.8 3.6 0.8 0.5 0.4 2.3 5.0 1.1 0.0 1.5 2.6 8.6 2.1 0.9 1.8

2019 2020 2021 2022 2023

»After nine months: start to the fourth quarter with an earnings head start of EUR +3.7 million compared to the previous year

Reporting after carve-out of group

company futalis in accordance with IFRS 5

Financial Details

Consolidated income statement Q3

Figures in Euro millions	Q3 2022	in % of revenues	Q3 2023	in % of revenues	∆ as %	∆ as m€	Increasing turnover in PF (+ 7.1%) and COP (+ 2.7%) segments, decline in Retail in line with strategy (- 6.7%)
Revenues	149,2	100%	157,8	100%	5,8%	8,6
Increase / decrease in finished and unfinished goods	-0,2	0%	-0,3	-0,2%	-27,6%	-0,1	In the previous year higher income from recyclable residual materials
Other own work capitalised	0,7	0,5%	1,2	0,8%	71,4%	0,5	arising during the production process in the consumables segment
Other operating income	6,5	4,3%	5,6	3,5%	-13,8%	-0,9
Cost of materials	-42,5	-28,5%	-43,4	-27,5%	-2,0%	-0,9	Slight absolute increase in line with turnover increase, while seeing improvement in
Gross profit	113,7	76,2%	121,0	76,7%	6,4%	7,3	cost of materials ratio due to price increases and lower share of COP turnover year-on-year
Personnel expenses	-46,7	-31,3%	-51,1	-32,4%	-9,5%	-4,4
Other operating expenses	-52,8	-35,4%	-55,7	-35,3%	-5,6%	-3,0	(-) Overall increase in personnel (↑ COP; ↑ PF Operations; ↑↑ Central Services)
EBITDA	14,3	9,6%	14,2	9,0%	-0,6%	-0,1	leading to slight increase in personnel expense ratio of turnover
Amortisation/Depreciation	-13,3	-8,9%	-13,0	-8,2%	2,2%	0,3	(-) Tariff increases effective August 1, 2023 also have an impact
Earnings before interest, taxes (EBIT)	1,0	0,7%	1,2	0,8%	21,7%	0,2
Financial income	0,0	0,0%	0,1	0,0%	-480%	0,0	(-) Higher selling expenses driven by business, increased marketing activity
Financial expenses	-0,4	-0,2%	-0,5	-0,3%	-36,1%	-0,1	(-) Higher administrative costs in the form of consulting fees and travel expenses
Financial result	-0,4	-0,2%	-0,4	-0,3%	-23,8%	-0,1	(+) Lower expenses from exchange rate differences
Earnings before taxes (EBT)	0,6	0,4%	0,7	0,5%	20,5%	0,1

Rounding differences may occur.

Balance Sheet at 30 September

»Total Assets increased slightly by € 6.7 m. to € 535.1 m. (+ 1.3%) »Positive earnings situation allows equity ratio to rise again to a solid 63.8% (Q3 2022: 58.5%)

From Balance Sheet to Management Balance Sheet

Management-Balance Sheet at 30 September

Rounding differences may occur.

»Increase in working capital due to higher business volume reduces operating cashflow

»Cash outflow from investing activities decreases by € 4.3 m. due to lower operating investments and no special investments

»Q3 free cash flow increases by € 0.9 m.

ROCE per 30.09.

»ROCE at a strong 18.1% above the 15.3% of the last pre-corona period in 2019 and also clearly better than in the previous year

* ROCE = EBIT / Capital Employed. Es können sich Rundungsdifferenzen ergeben.

Outlook

Q1-3 results confirm 2023 EBIT target: CEWE starts the Christmas quarter with an earnings lead

EBIT in million euros	Q1	Q2	Q3	Q4	Full Year
2022	2.1	-4.4	0.9	77.0	75.6
2023	5.1	-5.2	0.9		EBIT e2023 70 to 82
Δ 2023 vs. 2022	+3.0	-0.8	+0.0
		+2.2

Results Q3: CEWE confirms targets for 2023

EBIT in Euro millions

Results Q3: CEWE confirms targets for 2023

Targets		PY 2022	Target 2023	Change
1 Photos	billion photos	2.28	2.2 to 2.3	-3% to +3%
CEWE PHOTO BOOK	millions	5.85	5.7 to 6.0	-3% to +3%
Operational Investments 2	Euro millions	54.8	60
Revenue	Euro millions	741.0	720 to 780	-3% to +5%
EBIT	Euro millions	75.6	70 to 82	-7% to +8%
EBT 3	Euro millions	74.8	69 to 81	-8% to +8%
Earnings after tax 4	Euro millions	51.1	47 to 55	-9% to +7%
Earnings per share	Euro	7.20	6.58 to 7.73	-9% 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-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 2023 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 2023 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.