CEWE Stiftung & Co. KGaA — Earnings Release 2006

Mar 14, 2007

News Details

Corporate | 14 March 2007 08:55

CeWe sees itself benefiting from the transformation on the market

CeWe Color Holding AG / Results Forecast/Final Results

Release of a Corporate-announcement, transmitted by DGAP - a company of
EquityStory AG.
The issuer is solely responsible for the content of this announcement.

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CeWe sees itself benefiting from the transformation on the market

• In 2006 second-best operative earnings for the past six years

• European market share for industrial photofinishing reaches more than
  40 percent

• Digital business expected to grow by 27 percent in 2007

• Product innovations generate positive impulses

• Growth in earnings as of 2008

Oldenburg/Frankfurt am Main, 14 March 2007. The Board of Management is
looking to the future with optimism now that CeWe Color Holding AG,
Oldenburg, has generated its second-best operative earnings for the past
six years. 'We are optimistic that as of 2008, our long-term strategy will
be bearing fruit,' Dr. Rolf Hollander, CEO with CeWe Color Holding, pointed
out at the Annual Report Press Conference in Frankfurt am Main. After what
had already been forecast as declines in earnings for 2007 due to
restructuring activities, the Board of Management presumes that earnings
will rise in 2008. In addition, as of 2008, growth in the new business
areas and in the number of digital photos is expected to exceed the drop in
the number of prints from films. 'CeWe will emerge stronger after the
transformation on the market,' says Dr. Hollander.

Proportion of digital photos rises to 54 percent in 2007

With a market share of more than 40 % in industrial photofinishing, CeWe
Color is now the clear market leader in Europe – five years ago the market
share was still at 25 percent. Rolf Hollander: 'We have actively shaped the
process of consolidation and will also be actively following through this
course of action.' In the 2006 financial year digital photos already
accounted for 39 percent of all photos. For 2007 the company expects
further digital growth of 27 percent (2006: +34.3 percent). In the 2007
financial year the proportion of digital photos will for the first time
exceed the volume of prints from films and is anticipated at 54 percent.

Capital expenditure volume to be raised to EUR 36 million for 2007

The company will probably invest around EUR 36 million in 2007 (without any
corporate acquisitions; investments in 2006: EUR 32.5 million). The
investments are to be made in at least 10,000 new order stations for
digital photos in stores (DigiFoto Makers), in product development –
primarily software for Internet services and CeWe photo books – as well as
in digital production capacities. Acquisitions are to open up new business
areas and to promote regional expansion. Medium-term planning provides for
an investment volume of between EUR 150 million and EUR 200 million over
the next five years.

Investing in product innovations creates basis for future growth

'With the CeWe photo book we are writing an impressive success story which
is exemplary for our growth strategy,' Hollander explains. The number of
CeWe photo books ordered will probably double to more than a million in the
2007 financial year to (2006: 523.000). The product, which was only
developed by CeWe Color in 2005, will be on sale throughout the whole of
Europe in 2007 and will be supplemented with other product ideas. Average
turnover is also developing positively. Turnover for the CeWe photo book is
at EUR 21.70 per order, for digital orders at EUR 6.90 and for photos from
films it amounts to EUR 2.50. In 2007 CeWe Color will be extending the
range on offer with posters on canvas, visiting cards and other first-class
photo book models. 'CeWe Color is enhancing its skills as a specialist for
the industrial mass production of personalised products,' says Hollander.
Scale effects, efficient industrial processes, a favourably-priced,
extensive logistics system and a strong presence on the market in 60,000
retail stores with a total of 10 million customers every day give CeWe
Color an edge over its competitors.

Internet business growing strongly – impulses with Windows Vista

CeWe Color is now also providing its services to eight million Internet
customers. In 2006 the number of Internet-based orders rose by 59.3 %. This
trend is likely to be reinforced in 2007 through implementation of the CeWe
software program in the Microsoft Windows operating system Vista. As an
online photo service, CeWe Color makes it possible to get digital photos
direct - from digital images in a computer to prints on genuine photo paper
- via one of the company’s retail partners. Specialists from Microsoft and
CeWe Color worked on the application for more than two years. The system
provides Vista with the highest level of convenience and quality in terms
of digital photo orders.

Outlook: Growth in earnings anticipated as of 2008

The Board of Management of CeWe Color Holding AG still expects 2007
earnings before tax and reconstruction to amount to EUR 24.5 million.
According to current Board of Management estimates, expenditure for
restructuring the company is likely to be at around EUR 11 million, with
anticyclical positive effects amounting to EUR 1 million in 2007. For 2007
the Board of Management expects earnings after tax of around EUR 7 million.
However, given the investments being undertaken and positive restructuring
effects, earnings are expected to rise as of 2008.

Dividend proposal: EUR 1.20

Yesterday already the Supervisory Board of CeWe Color Holding AG
unanimously resolved to propose a dividend payment of EUR 1.20 for the 2006
financial year at the Annual General Meeting of the company to be held on
26 April 2007. Almost the full sum of disposable earnings for the 2006
financial year is to be paid out; the company’s own shares are not eligible
for dividends. In 2005 CeWe Color had already paid out a dividend of EUR
1.20. The Board of Management and the Supervisory Board share the opinion
that the shareholders should benefit adequately from the success of the
company and they are also convinced that this aim is being fully met with
the proposed dividend payment. At the same time, however, the ability and
the financial flexibility of the company in terms of successfully
maintaining the current course of action into the digital age, which needs
to be pursued with investments and acquisitions, must not hampered by
special dividend payments. Rolf Hollander: 'Given this background, a
dividend payout on the basis of reversing reserves, as required by a few
hedge funds, is not justifiable.' The reserves are indispensable in
securing the future of the company.

                            2005 in  2006 in  Chan-   2007(e)    Chan-
                            € m.     € m.     gein %  in  € m.   gein %

Digital photos in millions 0.83 1.11 +34 % 1.4 27.0 %
Photos from films in millions 2.60 1.76 -32 % 1.2 -32.0
%
Total no. of photos in 3.43 2.87 -16.3 2.6 -9.4 %
millions %
Sales 431.1 400.5 -7.1 % 380.0 -5.1 %
Earnings before interest, tax 68.6 63.2 -7.9 % 49.5 -21.7
and depreciation (EBITDA) %
Operational earnings (EBIT) 28.7 26.4 -8.1 % 15.3 -42.0
%
Earnings before restructuring 24.4 * 27.3 +11.9 24.5 -10.3
and tax % %
Earnings before tax (EBT) 25.5 21.1 -17.3 14.5 -31.3
% %
Earnings after tax 11.5 17.9 ** +55.4 7.0 -60.9
% %
Cash flow (earnings after tax 51.4 54. +6.4 % 41.2 -24.7
+ deductions for depreciation) %
Free cash flow (Cash flow – 15.2 22.2 +46.1 5.2 -76.6
investments) % %
Capital expenditure 36.2 32.5 -10.2 36.0 +10.8
% %
Liquid funds as at 31.12. 27.4 14.5 -47.1
%
Dividends (proposal for 2006) 1.20 1.20
in EUR
Employees on an annual average 3,730 3,131 -16.1
basis %

* not incl. EUR 13.9 million in positive insurance compensation
** incl. approx. EUR 9,7 million special tax-item

Should you have any queries, please contact:

CeWe Color Holding AG, Hella Hahm, Tel.: 0441 / 404 - 400 (Secretary – 234)
or

0171 / 34 50 530, Fax: 0441 / 404-421, email: hella.hahm@cewecolor.de

Internet: www.cewecolor.com

About CeWe Color: Photo service provider CeWe Color, with 20
highly-technical photofinishing plants and a staff of 3,000 employees in 19
European countries, is both market and technological leader. Every year,
more than 2.9 billion colour prints are supplied to 2006 customers from the
trade. In 2006 turnover amounted to EUR 400.5 million. CeWe Color is “first
mover” in the launch of new digital technologies, for example when ordering
digital photos via the Internet or by ordering terminals (DigiFoto makers)
at the local retail. The digitally individualized CeWe photo book can be
considered as one of the most successful products in terms of volume and
sales. In 1961, CeWe Color was founded by Senator h.c. Heinz Neumüller and,
with Hubert Rothärmel at the helm, the company went public in 1993. CeWe
Color Holding AG is listed on the SDAX.

DGAP 14.03.2007

Language: English
Issuer: CeWe Color Holding AG
Meerweg 30-32
26133 Oldenburg Deutschland
Phone: +49 (0)441 40 4-1
Fax: +49 (0)441 40 4-42 1
E-mail: info@cewecolor.de
www: www.cewecolor.de
ISIN: DE0005403901
WKN: 540390
Indices: SDAX
Listed: Geregelter Markt in Berlin-Bremen, Frankfurt (Prime
Standard); Freiverkehr in Düsseldorf, Hamburg, München,
Stuttgart

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