Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Transcript 2018-Q1

[Unknown Attendee]

[Audio Gap]

[Olaf Holzkamper]

Thank you very much for the introduction and a warm welcome from our side here. Warm in the true sense of the meaning, it's nice and cozy here in Northern Germany. You won't believe it. And nice weather, nice numbers. Christian Friege, our CFO, is certainly happy to present them. Christian, here you are.

[Christian Friege, Chairman of Management Board]

Good morning, everyone. Yes, I am, indeed, quite happy I have to say about the news that I can share with you. I trust you've all seen our press release from earlier today and that you've seen that we are clearly continuing to grow with an increase of 10.1% in turnover in Q1, and that is what we are specifically happy about with a strong showing of our CEWE PHOTOBOOK in the first quarter. We have achieved, as a summary, a stable EBIT of EUR 600,000 in the first quarter and that is including all restructuring and start-up losses et cetera of the acquisition that we've undertaken in the first quarter so that we are also not entirely unhappy about this. We have also, and I will be talking about that a little bit more broadly later on, we've also been awarded the TIPA award commanding CEWE as the Best Photo Service in the world and the last bit of our presentation today, we will confirm our forecast for 2018. Now going into more detail, there's a few things that, indeed, happened in the first quarter 3, which I would like to highlight before we go into the numbers. Number one, we've had our Annual Innovation Day in February. And for our Innovation Day, hundreds, and literally hundreds of CEWE employees from all over Europe come together at Oldenburg to look at new product ideas, to look at new process innovations, to share ways how we can further develop innovation in our company. And one of the unusual things about CEWE that there is no department that is tasked with innovation, but that, indeed, it is the whole crew of 3,600 people would think about how can we do things better, what can we do better, what are the products that will delight our customers and so on and so forth. And with that, in seeing the change, all the digitalization Industry 4.0 and all those buzzwords, people at CEWE are not afraid of these, but they embrace them, and they actually have experienced change as, something positive, and they drive the change forward. So we are happy to announce that we will have new products, that we'll have new ideas, that we will present at Photokina in September 2018 and a lot of that goes back to our Innovation Day in February this year. I'd also like to update you on our acquisition of Cheerz. We'll talk about photofinishing as the first step in this teleconference. We started to integrate an inverted commerce Cheerz. We've always underlined in the information to our shareholders that Cheerz would stand alone as a business, but, obviously, we are trying to seek synergies in the back end. And as we speak, we are starting to produce, step-by-step, slowly, slowly our products for Cheerz. This week, I'm being told, the first photo print will actually be delivered from our Montpellier laboratory to Cheerz customers. And the third upfront bit is that we are continuing to invest into our brand, specifically in photofinishing for which we have been awarded the TIPA World Awards as the Best Photo Print Service. We are very proud of this award because it underlines, again, the amount of quality and amount of innovation that even the publishers of this host of photo magazines all over the world and see -- in the CEWE products. And it is an award that we will not only continue to be proud of, but also will market appropriately. We've also been awarded, this has been made public in the press release, the unner-up in the Top Service of Deutschland Awards. This is an award that actually makes -- brings companies to the forefront, who are specifically customer-focused and obviously, that is part of our positioning as well. So we have the #2 position in the Top Service award for Deutschland, again something that we are happy and proud of. Coming back to the brand, we've been able to increase our unaided and aided brand awareness. Here in the slide, you can see the unaided brand awareness reached a very significant 57%. That means almost 6 out of 10 people would know when they're being asked what is a -- what photo service do you know, what photo book do you know, it is the CEWE PHOTOBOOK. We have an aided brand awareness in Germany of 75% and in a small numbers. And to the right, you can see that this is not only phenomenon that we are seeing in Germany, it's a phenomenon that we are also seeing in other European markets that we have represented in. So you can see that in France, we increased by 6 percentage points; in Denmark by 7 percentage points; in Romania by 11 percentage points and so on and so forth. So the strategy to focus on the brand is a strategy that, obviously, gets to the people, and I would go as far to say that part of the increase, the growth, the organic growth that we see in our product also goes back to this increased brand awareness. It's not only important to have an increased brand awareness. What we're looking at the Net Promoter Score is continuously rising. And with here, we also achieved a better number for 2018. The dark red column right out is 2018, and it's 60% that we have now achieved here. You remember the Net Promoter Score is all the promoters the scale from 1 to 10, we're marked at 9 at 10 top spots, minus everybody who has the 1 to 6 lower spots, and that is the Net Promoter Score in our definition and again, we are growing this quite nicely. So that translates into numbers. The numbers from films, the photos from films go up, go down, obviously, digital photos' [ price ]. We see that the category photos is growing for us and despite a planned decrease, we can see an increase here of 6.4%. Same for the CEWE PHOTOBOOK. I did mention that in my intro. We had hoped and planned for an increase of 1% or 2%. We have achieved 7.7%, and we see the CEWE PHOTOBOOK coming back after the problems that we've had with the VAT in Germany and some of the European markets and also with discontinuation of the U.S. activities and a trading partner that we haven't wanted to serve anymore. So this actually is not only a 7.7% increase, it is also an increase in business quality. If we look at the quarterly distribution of photos, here, again, we are talking about the number of photos and the distribution you can see that we see that we have reached our Q1 target and that is slightly better than expected. And if we look at the values of the photos, it's not only the prints that go up, but also the value for photo goes up from EUR 0.1955 to EUR 0.2028. So that the overall the turnover for photofinishing has actually grown by 10.4% to EUR 94.47 million. So again, I mean, it's getting boring for those of you who are following this conference regularly, but the value-added products further support photofinishing turnover. It's the value-added focus that keeps lessening our top line growth. For photofinishing, that then translates into the aforementioned turnover of EUR 94.5 million. As an EBIT out of the photofinishing of EUR 1.9 million. A few remarks to that. I talked about the good momentum. The acquisition of Cheerz generates additional sales, but you've seen in the numbers before that there is also a good chunk of this growth that comes out of our organic growth. And we have an excellent growth of the CEWE PHOTOBOOK in volume and in sales and also contributing are photo gifts, et cetera, et cetera. Now for the EBIT, we had and we communicated that before a negative contribution plan for Cheerz, and that will actually go through this business year -- fiscal year. And despite that negative contribution of Cheerz and restructuring that needed to be done, et cetera, et cetera, we've increased our EBIT. What we have not done though -- see the little remark on the right-hand side is the purchase price allocation of Cheerz will be finalized and closed as is with the accounting rules in Q4, so that then will actually have an impact. But I don't think that we should be overly unhappy about this result overall. Now if we look at the distribution over the quarters again, so we've achieved our sales goal for Q1. Actually we're marginally above. What I wanted to point out here is that we have over the past few years seen a development whereby Q4 has become ever more important as well as Q1 and the second and the third quarter actually became less important for our overall annual results. So I don't want to pour any water into the wine here, but I want to point this to you as well as the fact that we've had Easter in the first quarter whereby, in the previous year 2017, Easter was in April. And so some of that Easter business in photofinishing accounted for April. As I said before, the value-added product keeping the photofinishing at the upper end of our expected revenue range for Q1. And that translates into the EBIT, again, we feel that we've reached our target here, and we will see what Q2 and Q3 will bring. So photofinishing, from our point of view, we have a tick mark there in the commercial online print. Just as a reminder, for the new folks in the call, we're looking in our commercial online print at 3 brands, at 3 businesses that we're running, that's CEWE Print, the Saxoprint and Viaprinto that are focused on slightly different target groups. We have added a fourth brand and a fourth business on the 2nd of January this year, which is the company LASERLINE in Berlin. We are very busy in integrating LASERLINE into our portfolio, and we are confident that LASERLINE will actually soon start to contribute. At this point in time, unfortunately, it costs. If we look at the sales in the commercial online print, those rose by 18.8%, and that goes back to the LASERLINE acquisition. We still see a price pressure in Germany. We still feel under the weather as for the U.K. Brexit decision, and we've also had to account for 2 less working days. You remember Easter in March and the previous year and March is an important month for the commercial online print. That leads to a slight decline in EBIT for the first quarter, which we have the negative EBIT contribution from LASERLINE, but also higher material cost. We have a paper price increase across the board of our businesses. We have invested into new product lines, "Easybox" and "Promoline". We've had temporarily higher logistics cost to guarantee promised delivery time so there was some cost burdens in addition to the LASERLINE acquisition. Again, as I said before, for Cheerz, the purchase price allocation of LASERLINE -- for LASERLINE will be finalized and posted in Q4. As you can see we have a growth in the top line, and I'm convinced that we will see that coming through to the bottom line in due course. Start part of the business is our retail business, and we have 146 retail stores predominantly in Norway, Sweden, Poland, the Czech Republic and Slovakia. I always hasten to add that there are 2 stores here in Oldenburg. Traditionally, the Belgian stores that going back to the roots of our business in 1912. Our retail segment in the reporting that we're sharing with you contains the hardware revenue only. What you cannot see is that the retail stores are contributing to the photofinishing in the segment of photofinishing. And not only does the retail provide an excellent wins to the market, not only that the retail also underline our photo competence in general, we're also start, and you can in the next slide, we also start to rebrand our activity under CEWE. And with that rebranding, we are supporting our overall brand strategy in the 5 countries that I mentioned before. I've seen probably 3 or 4 stores already that looked that way or somewhat similar, and we will step by step carefully but steadily utilize our retail network more and more to set out to support our photofinishing brand. In our business segment, we are looking a continuous decline of sales, again, we're talking hardware sales only. You are using your smartphones, you all understand that the smartphone cameras become ever better. You understand that the intro segment of total hardware is actually vanishing, is vaporizing and there is only certain segments that are continuing in the fold here. And we're quite happy that despite that loss of hardware sales, we're able to increase our photofinishing as you can see on the right-hand side in the retail stores by 4.7%, and we are looking at the results, at an EBIT result of that segment that is more or less in line with previous years. So then remains our other segment. That is containing a number of things among which is our [ Tarlis ] subsidiary, and you can see there is a slight increase in turnover, the result hasn't changed. This is not really anything that we can report about this. So looking at the group, we see that we would have actually done, and this is the small number, would have done slightly better had we looked at local currencies. I mean, there's some years you win, some years you lose. This quarter one was a bit of a loser quarter and far as exchange rate are concerned, only as the exchange rates are concerned and we've actually documented here for you that if we were exchange rate adjusted, all 3 segments would have had slightly better overall and in euro reported, as I said before, we have an increase in our revenues by 10.1%. And this is, as I said before, driven by our photofinishing and driven by the commercial online print. And that translates then to the aforementioned EBIT of EUR 600,000. We are talking about basically a stable EBIT for the past 3 years that is composed of slightly different elements here, EUR 1.9 million from photofinishing, as I said, and then the minor losses in the other segment. So that we are where we are. And in a few weeks, I think it's 3 weeks from now, we will have our Annual General Meeting here in Oldenburg and the supervisory board and the board of CEWE have proposed the Annual General Meeting, the ninth consecutive dividend increase to EUR 1.85 per share. And we are quite proud I have to say, not because it's our strategy to increase the dividend, but it is the result of increased customer satisfaction. It's a result of an increase brand awareness, it's a result of increased business quality, and it's the result of growth in the business. As that, we are, indeed, quite proud of that. That is the overview, obviously, there's a lot more detail that you are probably interested in. And I'm sure Olaf Holzkamper can give you all that detail and more.

[Olaf Holzkamper]

Yes. I'm happy to do so. And to pick you up from the last word from Christian, which lifted you back on a 30,000 feet level, I want to drag you down to the cellar of the accounting, and we look at the P&L first. The first number you have seen already the total revenue of EUR 130.6 million, an increase by EUR 12 million and photofinishing and commercial online print, we're able to more than compensate for the little decline in retail hardware retail we have there. So that is the biggest change in this first part there then other operating income you reckon that there is EUR 0.5 million less in other operating income. It's not explained on the chart here, but it's less earnings from recycling of aluminum printing plates and the likes and paper that we have had especially in commercial online print that fluctuates all the time and this time is a little down here by EUR 0.5 million, that is mostly explaining the change here. Now we have cost of materials. They increased by EUR 3.7 million here, which is basically mainly due to the acquisition of Cheerz and LASERLINE overall in terms of percent of sales, you see a slight increase here but not really worth mentioning there. The next one, personal expenses. You see also the same as actually other operating expenses. There's a big driver of the acquisition on this year to year exchange -- comparison that we're doing here. So LASERLINE and Cheerz acquisition are increasing both factors there as well in sales -- in personnel expenses, it's EUR 4.0 million and there's an additional recruitment in central functions in there as well, which was happening in Q1. So there is also a percent of revenue, a very slight increase. And in other operating expenses, it's a EUR 2.9 million more in terms of expenses. But that is not a lot, and you reckon this also by looking at percent of revenue, which show a decrease even in this case to EUR 34.6 million. The main driver behind there being a little bit less in marketing perhaps where we have done somewhat more last year, and we thought we could reduce in Q1. But nevertheless, marketing is certainly staying on a strong position also this year. And I'm sure our marketing guys will find ways to spend the money and the rest of the year wisely, wisely, obviously. Next position is EBITDA increases by EUR 1 million and the other positions, there's no big change. Also, the depreciation we see there is keeping more or less steady at 7.2%, 7.3% of revenue. So there is no big change. Financial expenses are increased due to the money we have undertaken from banks due to the acquisition of Cheerz and LASERLINE. You will reckon that when we look at balance sheet in a second. And here we are already on the balance sheet. On the next page, this is the 12 months perspective. So you see that long term, we have -- throughout the growth organically and via M&A, we had over the last year, we had a nice increase in balance sheet over the 5 years. We can see here now this year increasing by EUR 65.5 million to EUR 391.9 million balance sheet in total. The chunk of that in long-term assets as you can see, EUR 84.4 million is the increase there. So mathematically, there has to be this decrease of EUR 19.4 million in short term assets, which even more than that, EUR 28.7 million is due to a reduction our cash position, which is due to the acquisitions we have done in Q1 this year. So that's the asset side. If you move over to the liability side, you see a nice increase in our equity position of EUR 26.0 million, and that leads to a still strong equity ratio of 59.3%. Even though the balance sheet length has increased somewhat substantially this year, we are happy to show the strong equity ratio there still. If we add to the debt long term and short debt, you reckon that we have been increased by EUR 39.5 million in debt. There's EUR 35.8 million in financial that's due to the M&A activities we had undertaken. So that's the main change in the balance sheet as it's officially reported. You know that we like to look at balance sheet in the management version, which is that you deduct the non-interest-bearing liabilities of EUR 148 million. So this way, we arrive at this capital employed and capital invested view of EUR 300 million in total. You see a similar increase here of EUR 62.2 million, so similar to the other balance sheet, the normal balance sheet we just looked at. You see the same increase in long-term assets. You officially, you see the cash decrease here of EUR 28.7 million, which is the biggest chunk there. And you officially see as well the increase in financial debt here displayed in the gross version on the right-hand side by EUR 35.8 million. So here you see the real drivers behind the numbers that we had to dig out of the normal balance sheet as before. Now if we look at this increase of 62.2 over the last 12 months, a bit more in detail for the last 3 months, you still see an increase of EUR 42.5 million in year from December 31 last year to March 31 this year. Now, where does that come from? Let's walk through the capital employed, look at the long-term assets first. Actually here it's called noncurrent assets, but it's the same as long-term assets on the page before we had that last time. So we've seen increase in the long-term assets of EUR 47.9 million. That is due to a couple of [ boxes ] we have highlighted on the right-hand side here, property, plant and equipment, normal increase of EUR 2.6 million, a little bit throughout the whole range of machines. We have a little bit more investments than depreciation. But given that we're just looking at one quarter, nothing worth really mentioning. Next chunk, goodwill increase by EUR 40 million due to LASERLINE and Cheerz acquisition. Now that is where most of the increase is coming from right now and Christian mentioned already that within the due 12 months where we have to deliver the final purchase price allocation, we will certainly do that and then this might change. For now, it's EUR 40 million in goodwill here. Intangible assets, EUR 1.2 million, it's mainly increase in software here and financial assets increase of EUR 4 million. That is largely due to the IFRS 9 changes we had to do. You know this IFRS 9 have to be applied first time in Q1 this year, and we have opted like most other companies, we have opted for showing any fair value measurement in OCI, in other comprehensive income, and this is what happened. We're going to see that more of that later when we look at the equity. So this is the increase of EUR 4 million here. That was most of the bits and pieces, explaining the increase of 47.2% in noncurrent assets. If we look at the net working capital, let's look at the operating net working capital first, which is inventories, trade receivables minus trade payables. And you do see that there is a decrease here in all 3 positions. Now you might ask where is the acquisition that we had done mostly in this quarter? Now the seasonal reduction is coming from the strong Q4 now moving to a more normal Q1, more regular Q1 quarter actually decreases most of these positions here very strongly. So this effect of seasonal reduction is stronger than the effect of the acquisitions we have been executing. If you look at a 12-month perspective, you would see all 3 items increasing due to the acquisitions exactly for these reasons to a large degree. But nevertheless, as the trade payables happen to increase more than the other first 2 positions, the net working capital actually even in a 12 months perspective decreases by EUR 1.5 million. So that was operating net working capital. Let's look at the other net working capital. And here, we'll see the first bigger change in receivables from income tax refund, that's our way just to show the tax prepayments we are doing. They are not shown in the P&L, they are simply basically shown in the balance sheet here and in our P&L, we just show a deferred tax that would be the theoretical tax that we're applying there. So this is prepayments of tax increasing our current receivables from income tax. Here, the EUR 4.8 million increase. Looking at other current receivables, the next one is plus EUR 3.2 million, that's mostly actually accrued expenses for machines, and so on, so that's just normal accounting position, no major structural change whatever here as well. And if we go to the other current liability changes we are seeing there, you see this plus EUR 2.3 million, which in current financial liabilities, which is still the escrow accounts that are opened, that belong to the 3 acquisitions we have done. So that's basically MA related. Then the biggest single change is in other current -- other liabilities see it's very helpful if other has the biggest change. You see the decrease here by 16.7%, and this is driven by the settlement of the VAT payments necessary after the strong Q4 Christmas business in December, we had a lot of liabilities from VAT, driven by the VAT. You see the EUR 43.3 million as of December last year, and these were just due. We had to pay them, and this is a big chunk of money you see here, mainly driving those EUR 16.7 million, and that's actually more than last year. We'll get to that I think that's roughly EUR 8 million more than last year, and that is driving our cash flow quite a bit in this Q1. So that's an important driver, this VAT payment here. It's just a factor of the strong Christmas business of last year. Now having said that, we can sum it up. We have looked at the other network, the operating net working capital that decreased a little bit in Q1. We have seen the increase here in other net working capital that leaves us with an increase of net working capital of EUR 17.9 million, i.e., we can now sum up all the details if we add the noncurrent asset change of EUR 47.9 million and the decrease in cash due to the acquisitions of EUR 23.4 million, we end up at a change of capital employed of EUR 42.5 million throughout Q1 in capital employed and obviously and lastly capital invested is the same number. Change is EUR 42.5 million, at the right hand bottom of this chart. Now the 2 factors driving this are: One is the equity, you see the increase of EUR 4.6 million. This EUR 4.6 million is the comprehensive income you find in our calculations. Then if you look into the statement of changes in equity, you see some IFRS booking of EUR 2.6 million there which we would have had to do if IFRS 9 would have been applicable last year already. These changes happen to be booked in statement of changes in equity. So there's the EUR 2.6 million and there's the EUR 1.2 million in comprehensive income I mentioned already and then that leaves you an EUR 0.8 million in owner-related FX sales of treasury sales and stock options spend and so on. And this all sums up to the change in equity of EUR 4.6 million. The other change and the biggest change in capital invested is the gross financial liabilities. You see the increase here of a noninterest-bearing and the biggest chunk of interest-bearing, obviously, due to the acquisitions that have been financed here, and that's an increase of EUR 37.0 million. So that way, our capital employed, capital invested increased. Now if we look at the free cash flow, and we mentioned already a couple of points here. And you do reckon that the cash flow from operated business here is down EUR 9.1 million from EUR 1.6 million to EUR 10.7 million. But if you bear in mind, we had the VAT effect of having to pay more VAT much more than last year, that makes up for EUR 8 million of this difference already. So that's the biggest driver, by far, the biggest driver in here, and that becomes just more and more normal in that sense. If we look at the outflow from investment activities, you do see increased investments here of EUR 43.3 million, Now summing up to EUR 48.8 million. That is, obviously, driven by the acquisitions of Cheerz and LASERLINE now it's also by some acquisitions of building we have done here in our headquarter that is adding to that. But mainly, this is M&A for Cheerz and LASERLINE and this, obviously, is something that happens just every couple of years. Now in total, that sums up to a negative free cash flow of EUR 59.5 million. But, as I said, that is really exceptional for us. The free cash flow in detail, you can see on this Page 41 here, and you reckon pretty much all the changes we had already mentioned. The first one, the decrease -- this change of EUR 3.6 million in operating net working capital is payments to suppliers that we mentioned. The EUR 12.6 million, that's where you reckon, there's the additional payment especially which is driving this factor here of more than EUR 8 million in additional VAT payments, and that led to a minus EUR 12.7 million in total in other net working capital. There was a lot left in the last year. Taxes paid, we mentioned, the 4.8 already. The 4.8 due to some changes in tax base liabilities, the 4.8 we just looked at are a 5.2 in this Q1 here, you reckon, and this is just more tax. We had to pay in this first quarter, and this is driving the change in cash flow from operated business. About the other positions and investment we talked already, and this is all the details to know about. The cash flow. Now if we finish up looking at the ROCE, what you reckon there is obviously a 12-month EBIT that has developed nicely and increased to EUR 49.2 million. Now at the same time, the average capital employed, which is the average of the past 4 quarters have increased to now EUR 259.8 million, which reduced the ROCE to 18.9%. And as you are aware, the average capital employed will continue to increase for a couple of quarters still as the increased position we see right now is actually crawling into this number of the average. So there's a slight ROCE decrease to be expected for the next quarter to come, but nevertheless, if we take it like all other things equal, treat it as variable assumptions, you reckon that we will end up around 16% a bit more, a bit less, however you calculate it, which is still a very solid ROCE level, a good position to start from there increasing that further again once our 2 new acquisitions turn profitable again. And with this last, I pass it back to Christian for the outlook.

[Christian Friege, Chairman of Management Board]

Well, and for the outlook, not surprisingly, we are confirming our annual targets for 2018. Everything else would probably have been not [ funds ]. We are confirming our annual targets for 2018, that is a revenue increase between 5% and 11%, an added development between minus 2% and 10% and an EBT development between minus 3% and plus 9% and all the other numbers you've seen before. So we confirm the annual targets for 2018. And with that, this is the slide that we tend to look at. Our long-term positive development is very much in order. And you can see that the expectations for 2018 within EBIT between EUR 48 million and EUR 54 million is absolutely in line with the long-term positive development that we have seen for the past 10 years. And with that, I would like to hand back to Q&A.

[Olaf Holzkamper]

To Q&A. So all of you, and we are happy to take your questions.

[Operator]

And we have the first question coming from the line of Martin Decot.

[Martin Decot, Research Analyst]

Regarding the organic growth in photofinishing, is it a reasonable assumption that about 2 -- EUR 3 million to EUR 4 million sales came from Cheerz so that organic growth was more than 6%? And if you look at your expectations regarding the Cheerz sales growth, is it 50% also for 2018? Or did I get this wrong? And although if you look at the EBIT of Cheerz, do you still expect the EUR 4 million negative impact on group EBIT from the Cheerz acquisition, that's my third question. And then my last one regarding commercial online printing, the organic growth without LASERLINE if I contribute -- if I estimate LASERLINE was, let's say, a bit more than EUR 3.5 million in sales was organic growth then below 1%? Or am I wrong with that?

[Olaf Holzkamper]

Thanks for that question, Mr. Decot. On the first question on the organic growth in photofinishing, if we take out the Cheerz numbers, your assumptions seem quite all right there. I think you are on track in showing the right numbers there. In 2018, I think I missed your second question.

[Christian Friege, Chairman of Management Board]

It was the growth rate of Cheerz. What we see -- what we've said about Cheerz when we acquired Cheerz as far as the growth rate, specifically the bottom line result, the EUR 4 million that we quoted are concerned, we will confirm both of those.

[Olaf Holzkamper]

Yes, exactly.

[Christian Friege, Chairman of Management Board]

No change to the date when we acquired the company.

[Olaf Holzkamper]

Yes. And the commercial online print organic growth, you are completely right with your calculation there. We are below 1% in organic growth there.

[Operator]

There are no further questions. [Operator Instructions] And we have the next question coming from the line of Christian Weiz.

[Christian Weiz, Analyst]

A question from my side with regard to the commercial online print printing business. What's the situation there? Do you still have this very tough competition from one particular competitor? And is there any chance that we're going to see an ease with that regard? That's my first question for the time being.

[Christian Friege, Chairman of Management Board]

The market is, I have to say that, developing in different ways, some of which we like better than others. We've been reading in some of the press publications that one of the competitors, the group of companies at [ Beligarde ] actually acquired over the last 1 to 3 years including online printers in Germany is planning to have an IPO in fall. We see still a pressure in the market from the one competitor that you mentioned. And so unfortunately, the development in the -- certainly, the German but also in the European commercial online print market is at this point in time, not favorable for us. Would we still maintain that with the acquisition of LASERLINE and some of the measures I did mention, for example, our flex box -- "Easybox" product in Saxoprint with some of those developments, we can still show a visible growth at the end of this year. Yes, I still hope that. But, as you say, the market conditions are not as favorable as they could be.

[Christian Weiz, Analyst]

Okay. And second question is with regards to personnel. When I look at the photofinishing division, I see an increase of 7.6%. You say that 90 -- about 90 people that you added are coming from Cheerz, but still you have an increase of 80 people or roughly 3.5%. What's the reason behind this? Is this for additional admin? Or is this because you expanded your production? Can you elaborate a little bit on that, please?

[Olaf Holzkamper]

We have mentioned that -- actually, you might see just some writing on this page where we explained the P&L. The additional personnel we have seen there in our headquarters are in value-added areas like R&D and marketing, where we keep increasing over the last years, which keep increasing a lot also in output there. You've seen how Christian started out by showing the increase in brand awareness we have seen for the CEWE PHOTOBOOK and all this need to be managed. So this is done by these people mainly.

[Christian Friege, Chairman of Management Board]

And just to add to that, the explanation that explicitly includes Cheerz and LASERLINE. And if you add those, you're basically at the same percentage of revenue as we were in a year ago.

[Operator]

There are no further questions. I will now hand over to Dr. Christian Friege for closing words. Please go ahead.

[Christian Friege, Chairman of Management Board]

Well, ladies and gentlemen, as you can see, we have had a reasonably good start into the fiscal year 2018. We have strengthened our strengths, and we have also been quite successful in implementing -- in integrating the 2 new acquisitions that I report on Cheerz and that we're starting to produce in our Montpellier lab and that we are also making good progress in the integration of LASERLINE, which is a bit more work. And so we are confident we are underlining that the growth that we had expected when we reported about the expectations for 2018 in our annual press conference is still as much on the agenda as it was at that point in time. We keep growing, and we keep confirming our annual goals for 2018. And with that, I thank you very much. I'm looking forward to see many of you at our Annual General Meeting. And if not, then we will meet again over the telephone when we are looking at Q2 results. Thank you very much, and you have a great and sunny day.

[Olaf Holzkamper]

Thank you very much. Bye-bye.