Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Transcript 2019-Q1

[Olaf Holzkamper, CFO & Member of the Board of Management]

Thank you very much, and a warm welcome to all of you to today's conf call of CEWE for the Q1 numbers of 2019. A warm welcome on a nearly warm day in Oldenburg. Things are progressing here. The weather is progressing. The numbers are progressing too as you might have seen but more to that in a second from Christian. We have the typical run down. Christian is going to give you an overview of where we stand overall and he's going to comment on the P&L numbers according to the segments. And I'm going to deliver some more details on P&L, balance sheet as well as cash flow before we are happy to answer your questions.And now I would say typically, we start the Q1 communication with saying at least in the 3 years we are not entirely unhappy. Now given the latest development, Christian, how would you phrase it this time?

[Christian Friege, Chairman of Management Board & CEO]

Well, good morning to everyone. We had a very good start into the year 2019, so I would agree with Olaf. We are not entirely unhappy about that. Indeed, we were able to increase our business by 7.5% to EUR 140 million, and we've done so profitably, increasing the EBIT in Q1 by EUR 1.7 million to EUR 1.9 million. That is a reasonable and good start for a year that we, as I said, are not entirely unhappy about.Locomotive for this is again our photofinishing business. We increased the sales there by almost 10% to EUR 103 million and also a good jump ahead in terms of the EBIT. We are -- and I will come into more detail -- go into more details there, we are also doing reasonably well on the sales side in our commercial online printing, but the price pressure, Brexit and also some weaknesses with our acquisition of LASERLINE do not support the EBIT there as much as we would hope it would be. And as far as the retail is concerned, the strategy and again, that will be expanded a little further. The strategy, that is still the same, so we are looking at a slight loss in sales as we would expect.Now coming into -- going into more of the details. For the photofinishing. Our -- one of the key success factors for what we see in the numbers that I touched shortly on is innovation. We have, in the first quarter, traditionally our innovation days. Here in Oldenburg, you see some of the participants in that meeting on the slides here. You know that there is no department and there is no responsibility at a single point for innovation. It is everybody's responsibility, and we celebrate that. We celebrate that. We live that. And we've had this big fair of new ideas both as far as product and photofinishing are concerned as well as ideas across the whole group in Oldenburg earlier this year. And a major focus here is on artificial intelligence. We believe that there is quite some significant potential for artificial intelligence to make our customer experience a better one, to make our processes better processes. And so it is only consequent that we open our own organizational little units that will focus all artificial intelligence research and that our mic -- our mobile and artificial intelligence campus, and we opened that with State Secretary Muhle in January. And we are now working not only on our premises in Oldenburg, but we've also rented some rooms in a startup facility right next to the university because that is where we cooperate with the university.Now as far as our customers are concerned, we are very mindful of the fact that artificial intelligence in the public discussion is not something that is entirely positively connoted. And so we stand for progress with reflection. We have implemented a customer charter for responsible digitization. And we have set up 5 clear rules for what we want to do with digitalization. Our business model is that we protect our customers' data, and it is not the basis of the business model but something that we need to serve our customers. We are not selling the data, and we are not building business models on the data. Our technologies -- each and every of the new technologies that we are developing is serving to help and support our customers and make their life a better life. We always maintain that our customers have control over which of artificial intelligence elements they use. So number four, we are open and transparent. On our website, you can see where is it that we use artificial intelligence already today. And you have to switch that on and not off, that's a major difference. The customers has to take the decision, "Yes, I want to use this," and not, "I have to switch this off," as this would be with a lot of other people in the online world.One of the motivations is also that we wish to actively shape our future on the basis of European values. If we, as Europeans, do not use artificial intelligence, do not develop business models around this people from China and from Silicon Valley will do so with a significantly different set of values behind that. And in order to make sure that whatever we are developing here is living up to this customer charter, we have a customer charter advisory board with Professor Boll from the office here in Oldenburg, with Professor Wahlster, who is the doyen of artificial intelligence in Germany and Ranga Yogeshwar, who is a very, very well-known science journalist and TV presenter in Germany.So innovation will focus on artificial intelligence. It's one of the engines of what we are doing. The other is that what we are doing is also well received. And we are very proud of the fact that for the first time ever in the history of the TIPA World Awards -- if you remember, this is basically the world championship trophy in photofinishing. For the first time ever, a company was able to defend the cup, so to speak. So after 2018, where we got awarded for the CEWE PHOTOBOOK and the cover -- designed the enhanced covers. In 2019, we were awarded the TIPA World Awards for our hexxas product. And now, one of the things that you don't see on the slide is that whilst we got the Best Photo Print Service Worldwide 3x as CEWE, our new acquisition WhiteWall was also awarded twice in the past few years in 2013 and 2017 and that also is good to show you where the whole CEWE group is focusing. It is on quality and it is unrecognized innovation and being on top -- the upper end or the top end of the market.And there's another connection to what I told you before with innovation, and with a lot of people that you saw on the first slide. hexxas was developed by a group of staff. The first idea of hexxas came out of Hekaton. We called it [ Stupid Days ] at CEWE. And over the weekend, a small group of people from different departments developed the initial idea to hexxas. And they then also were given the resources to develop that into a marketable product. We introduced hexxas as Photokina in 2018, and we are truly very, very proud of the fact that we are now awarded the TIPA World Award and for the second consecutive year and for the first time overall. And together with WhiteWall as I said before, this is the fifth TIPA award.And besides that there's another success factor that we must not forget about and that is the brand. The brand that we introduced some 10, 12 years ago and the brand that keeps going from strength to strength. And one of the very important results in this first quarter is that the sale of the CEWE PHOTOBOOK increased by 6.9% to an excess of 1.3 million copies. That is only possible because we have a clear proposition in the marketplace with a clear branding in the premium segment of the market that allows for us not only to sell an increasing number of PHOTOBOOKs, but also to do so profitably.Now if we dive into the numbers, you can see that the signs go upwards. We have a total number of prints increasing by 8.7% and clearly underlining the growth that we have in the company. We have been able to increase the value per photo slightly, so that in total the turnover photofinishing in Q1 increases by almost 10% and that's despite the fact that Easter last year 2018 and the comparative numbers falls into the first quarter. This year, it's part of the second quarter. And Easter is one of the smaller days that give us a little extra sales from presents.CEWE PHOTOBOOK, I already expanded on that. These numbers, this increase of 6.9% suggests an increasing demand for photobooks, and it does not suggest that there is an end to a market for photobooks. Often times, I'm being asked in interviews by journalists, sometimes even by analysts, asking what do you think when will come the end of the photobook. I cannot see anything about an end of the photobook here nor can we see that in our order books.Now on the next slide, we are looking at the quarters. You all know about this slide, and it underlines what we've seen over the past few years, and that's shift of seasons. The fourth quarter is going from strength to strength, and you can see that we are doing almost 45% of our sales in the fourth quarter. But also the first quarter keeps running slightly stronger every year. So fourth quarter goes up, first quarter goes up. And if something goes up and the total is 100%, something else has to go down. And we've seen that significantly last year. And we don't know what's going to happen this year, but traditionally over the last few years Q2 and Q3 are slightly weaker.Now so you want to keep that season shift in mind. However, this year if you look outside, most of the days in April and May so far were sufficiently rainy for being order dates as we would call them. So those are the dates when you sit at home and order for the products, and there are not photo-taking days like today in Oldenburg. When you look out, it's blue sky, it's very sunny. That's a photo-taking day. And those days, you take the photos, but the weather is much too nice to sit down at home and order. So overall, mind these season shifts, but also think about the weather.Then if we look at the total of the photofinishing segment, there is one technicality to keep in mind this quarter, and that is last year, we added Cheerz to the fold on the 1st of February. So the whole sales of January counts towards the growth. As of February, then this goes against the previous year. As I know that you are always very interested in Cheerz, here is the information, in particular about Cheerz, and that is when we acquired Cheerz, we had obviously a business plan that we put towards the Supervisory Board, and that we said on the basis of this business plan this is a worthwhile acquisition. And the good news is that we not only presented a business plan, we have a more pessimistic and a slightly more optimistic version. We are running more towards the more optimistic version with Cheerz than to the original business plan. So we're quite happy about that. And you can see that not only do we -- did increase the sales, but also the EBIT. This is all put down on the slide.And then on the EBIT slide, you see the same picture, as I've said, that you have seen on the sales side. It goes up in Q1 with the seasonality shift that we pointed out to you here over the last few years as per quarter 2, quarter 3. And then obviously, the hopes for a great Christmas quarter.Now photofinishing, as I said before, is the locomotive that pulls the train. The commercial online print is more -- a little more of a challenge for us, I would have to say. We are still hampered and held back by Brexit. The never-ending story of the decision of where we now are with that and still the same situation of a price pressure that we have, specific in the German market, but also in 1 or 2 of the other markets. And we have also negative LASERLINE contributions that we had hoped for to have overcome when we initially invested in the company. So those are the 3 reasons behind the slightly more negative result on the EBIT line. On the positive side, we've been able to increase the turnover by 3.3%, and that was against fully consolidated LASERLINE last year. So we do not have the Cheerz effect here, but LASERLINE was on our books as of the 1st of January last year. So the 3.3% are true organic growth.For retail, as already mentioned before, that our strategy to shift from our -- the hardware sales, where you all know cameras are not the hottest item in the world at this point in time. Most people carry their camera around and call it a telephone. Now that obviously, puts pressure on camera sales, as we've seen over the past years, and this is entirely expected on our side. And so camera sales are going down, and these are the sales that we're reporting here. Whereas the photofinishing sales that we are actually receiving from our photo stores and the high street stores, the retail business are doing quite well. And they flow into the photofinishing reporting that I have just explained.On the other side, the retail business provides an excellent window to the market. So we learned a lot and with the cobranding that we've done. CEWE Japan Photo and FOTOJOKER CEWE, FOTOLAB CEWE, we are now consequently pushing our CEWE brand into the countries where we have our 147 retail stores. So the slight downward trend in turnover, as you can see, since 2015 is as expected as it can be. And I can assure you that this is a fraction of the downward trend that we see if we look at GFK figures or other market players who are going down a lot more. So the position as a specialist retailer is paying off here as much as, as I said before, brand-carrying and photofinishing. And the EBIT is more or less in line with last year, a little bit better, but in the overall scheme of things, too significant.We move on to the business segment, other. You all know that this is basically futalis. futalis has been growing by 42% this year in the first quarter, so a little bit better than the previous years, and then also leads to a slight improvement in the bottom line. So if we add all this up, we're getting to the EUR 140 million in sales that I mentioned before, plus 7.5%. And as I said before, we are not entirely dissatisfied with that. The EBIT comes from our photofinishing with -- as in the previous years, as you can see some slight losses from the other businesses that are fully in line with our expectations from the previous years.Now there's one topic that I've spared you, and I don't want to do that. So here is the slide about WhiteWall. You've all seen our talk from 10 days ago when we announced that we have the intention to acquire WhiteWall. We've signed the contracts, and we are now waiting for the closing of the deal which we expect to take place as of the 1st of June this year.Why have we acquired WhiteWall? Because WhiteWall is a great business. WhiteWall is carrying a great brand that is positioned even above the premium brand of CEWE. So we're looking at a prime segment for wall art gallery, quality wall art. There is professional photographers around the world are customers of WhiteWall, and so we feel that we are strengthening an aspect of our photofinishing that is not at the forefront of what we are doing at CEWE. We're coming from the CEWE PHOTOBOOK. We are doing very well in all kinds of other segments but the wall art is not our strongest segment, and so we are strengthening a segment that is not the strongest. We are adding a brand that is above the CEWE brand and adding target audience where we feel we cannot stretch our CEWE brand to. It is inconceivable for us that we can at the same time be a great partner for drugstore chains and be the supplier for professional photographers, so there is a logic for a second brand here. There is a logic also for what will definitely happen which is WhiteWall remains WhiteWall and CEWE remains CEWE. We will keep the production facility of WhiteWall. We will do whatever we can to extend that to its potential, and we feel there is some potential. But we will not mix up the production of CEWE and WhiteWall and for the wall art. And last not least, WhiteWall is also having some interesting distribution outside of our core European market, and we feel for this professional segment there is some potential in that as well. So we are very delighted with the acquisition. We feel that we have paid an adequate price, and we see that there is long-term potential with WhiteWall to strengthen the CEWE Group to strengthen our profitability and to strengthen our share of the market, specifically within Europe.And without further ado, I hand over to Olaf Holzkamper who has all the details of the financials for you.

[Olaf Holzkamper, CFO & Member of the Board of Management]

Thank you very much, Christian. And I'd like to start with a detail that is going to pop up in a couple of the reports later o,n, so let's take that once and for all. And I mentioned here, we've seen the IFRS 16 change which is the accounting of the leasing liability. We had to do with this from beginning of this year on. And what you see in this chart here is exactly what the changes were from December 31 to January 1 that we have seen there. So we have seen the increase of EUR 65 million in property, plant and equipment, and we've seen the same increase in all the other liabilities you see there in the rows underneath. So all in all, you are going to see some -- a bit more than EUR 60 million increase in the later numbers I'm going to show you. The reason for this not being EUR 65 million anymore is that obviously, even within Q1 there was some depreciation in all this, and this is driving the property, plant and equipment numbers down, obviously, as we move on.The 2 small numbers you can see here in the middle that had to be reduced, non-current interest-bearing financial liabilities and current interest-bearing financial liabilities, the minus EUR 65,000 and minus EUR 21,000. I mean that's just somewhere in our group where we had finance leases before and they obviously had to be incorporated now into this leasing accounting as well. So that's the most important thing, a change in our balance sheet as probably pretty much all the other companies you are looking at and do see right now.That didn't do a lot to our P&L, which we can see on the next page here. If we look at the big changes, obviously, you have seen the EUR 9.8 million increase in revenue. That is driven mainly by the photofinishing as we have seen just. The other big changes here, some other operating income, minor increase by EUR 0.7 million mainly due to release of approvals and these things. And then actually, the next big 3 number, cost of materials, personnel expenses and other operating expenses, they just increased because we did more business in Q1. And that's the reason why we do see an increase here in all the cost items. And there's some change in between other operating expenses where you see this increase of only EUR 1.4 million, and the amortization, depreciation where you see the increase of EUR 3.0 million. And that is due to this IFRS 16. In IFRS 16, we had some hope. We had some cost decreases, if you want, in other operating expenses because leases are taken out. So there is other cost increase like the acquisition of Cheerz in January where we will still have the acquisition effect and the growth in February and March, obviously. Added some cost in other operating expenses. And then to the contrary, in amortization and depreciation, this popped up again because we do see there as an additional depreciation due to IFRS 16 adoption, as you can see in the comment here. So that is something that all in all nets out pretty much at 0 at the bottom. Otherwise, no big change in P&L.If we move from the P&L on to the balance sheet. What you can see here is obviously, the extension of the balance sheet. And you can see on the left-hand side, on the asset side that we had this increase to EUR 464.3 million. Out of that EUR 62.9 million is due to the property, plant and equipment increase due to IFRS 16. So there's big increase there. And on the other hand, you can see on the right-hand side that IFRS 16 provides an increase in noncurrent and current lease liabilities there. If you add the numbers and on the next chart or the second part -- next page, you can see that the numbers do not exactly add the 62.9. It's a 62.7 on the liability side, and that is due to the fact that the contract -- the lease contract and the -- on the one hand side and at the whole interest calculation of IFRS 16 on the other hand side do not exactly add up. And that's why only on 1st of January these 2 numbers were exactly the same. Now obviously, they do fluctuate up and down a little bit. But roughly all in all, these 2 numbers should be pretty much on the same level.The other important thing here on this balance sheet, if you look on the very far right on top, you can see even though we had the increase of the balance sheet to EUR 464 million, our equity ratio is still at EUR 54.9 million. And if this increase due to IFRS 16 hadn't happened, then we would look even at an equity ratio of 63.5% equity ratio. So that is a sign of a pretty much stable balance sheet, obviously.If we focus on the capital employed only, we have to take out the noninterest-bearing liabilities, which we indicate on the left-hand side, so the balance sheet total runs down to some EUR 260 million. And what you can see there on the next page is we have this increase of EUR 62.9 million due to IFRS 16, but this increase you don't even see here. You see less of an increase in capital employed, and that is due to the fact that we have had reduced cash, which you can see at the bottom here on the left-hand side. We have reduced net working capital due to seasonality effect, as we will talk about in a second in here. So that is capital employed on the left-hand side, and on the right-hand side capital invested. There's also the change, as you can see on the right-hand side, all these IFRS leasing liabilities needed to be added here. And that's the reason why you don't see the gross financial liabilities we have vis-à-vis our bank really anymore. But just to shed some light on this, last year in 2018, after the acquisitions of Cheerz and LASERLINE, you've seen that we had gross financial liabilities of EUR 38.6 million. Now if we subtract the lease liabilities, we see that we have left gross financial liabilities vis-à-vis banks of EUR 6.9 million only. So the EUR 38.6 million was reduced to not even EUR 7 million of bank debt, and that shows how nicely we were able to cope -- operationally cope with the acquisitions of last year. Now these are the changes within the year. If we look at what changed within the quarter, we can look at that on Page 38 in the table. The capital employed here has increased by EUR 67.6 million, as you can even see in the next slides, and there's 2 main reasons for this. The one is IFRS 16 which you have heard a couple of times now, and the other one is obviously seasonality from end of Q4, our high season quarter to end of Q1. Now IFRS 16, the change you can see here in this very first row, plus EUR 58 million in property, plant and equipment within Q1 that is mainly driven by IFRS 16. And then you can see, as we do not see the EUR 62.9 million full year, you can realize that we haven't invested as much as we depreciated at this point. So you will see that in the cash flow as well we had a rather limited investment quarter in Q1. So that's the big change in property, plant and equipment, IFRS 16. The rest here is pretty uneventful in this row. And the next changes are here in the working capital, on this Page 38. You do see the operating net working capital. And all changes, be it inventories, be it current trade receivables or be it current trade payables, all the changes are driven by the seasonality. Inventories are reduced, trade receivables are reduced, and current trade payables are reduced even more because we need to pay our suppliers and our retail partners for their strong performances in end of last year. And that's the reason why the operating net working capital is reduced -- is increased slightly here. So that is the main driver. All these big changes underneath are fully due to seasonality, no big thing to talk about. If we move on to the other net working capital, from the operational to the other net working capital, we see there is also one seasonality change with CEWE which is the decrease of other net working capital to a minus of EUR 30 million there. And the big change is -- in this position is other -- current other liabilities. We see that this position decreased by EUR 17 million. The reason for that is seasonality. It's, on the one hand side, the VAT payments for the success of Q4. That's why the VAT needed to be paid. And on the other side, it's the holiday provisions that obviously are being used up during Q1 here.So adding that up, net working capital means that the net working capital and cash flow effect has changed from a minus EUR 22.5 million to a positive EUR 3.4 million here. And all in all, it means capital employed -- at the bottom you see the EUR 67.6 million that we have here as capital employed.Now if we move on from capital employed to capital invested, there is obviously the same change. And we get back to this IFRS 16 change where we have the increase in noncurrent and current leasing liabilities, and this is the reason why capital invested is being driven up there with in Q1.Now moving from capital employed to cash flow, and I hope you bear with me. I reckon that obviously there is some issues with the presentation mode in our technology here, but I hope you will bear with me, and I'll try to indicate. I am now on Page 41 in my printed version here, free cash flow Q1. You see that as the cash flow from operating activities, we had a slight reduction of minus -- from minus EUR 9.9 million of last year to minus EUR 10.7 million this year, and that is, as indicated, fully due to seasonality. We had to pay our retail partners. We had to pay the success of our trade partners where we had to pay out their margins within Q1, and we had to pay the VAT increased payment in Q1 due to the success of Q4. So all that is fully due to seasonality. Regarding cash flow from investing activities, we didn't have the big payments due to Cheerz and due to LASERLINE that we had last year. That's why the minus EUR 49 million of last year didn't happen again. And we are just at the minus EUR 4 million in terms of investment payments in Q1 2019, which is even low compared to the years 2017-'16 and so on, if you compare before. And the reason for that is that we had a modest investment quarter in Q1, but that is just a timing question. It does not have to be that way, and investment is going to increase at some point in time soon, hopefully.So all in all that means free cash flow-wise, we had a nice increase of EUR 44.2 million, a free cash flow of EUR 14.7 million negative, which is fully in line with what we would expect in Q1.Now next page, 42, and I hope you can follow now on the presentation version as well. On Page 42, free cash flow Q1, you can see some more of the details. I think I talked through most of that right now. And the big things again we see here are seasonality. That is driving our cash flow down compared to what we have seen last year because we even had a stronger seasonality again. And it's the last year's acquisitions of Cheerz and LASERLINE that -- especially in the invested cash flow obviously didn't happen again, but we looked through that in an overview level already on the chart before.What does that mean regarding our ROCE? We have seen this nice increase in our 12-month EBIT, rolling EBIT of EUR 255.4 million EBIT increase there. And the ROCE, the capital employed that we calculate here, always at an average of the past 4 quarters, has now increased to EUR 315.5 million. That's the reason why our ROCE is down a little bit to EUR 17.6 million. If we take this calculation here, if we take the IFRS 16 calculation out there, as it's indicated to you on the right-hand side top, it would be a ROCE level, strong ROCE of 18.5%. So ROCE is strong. And obviously, for all companies, IFRS 16, if we applied this correctly, will reduce ROCE, just calculation-wise a little bit in the next quarters to come as the new calculation formula claws its way into the average. But nevertheless, it will remain a very strong ROCE. We are happy to have a great performance number also compared to capital -- to return on capital as well.And regarding the outlook, I'd like to pass on to his master's voice again, Christian.

[Christian Friege, Chairman of Management Board & CEO]

Yes. Well, if you sum all this up, if you take into consideration what we published 10 days ago, when we published the acquisition of WhiteWall, where we talked about the EUR 1 million, roughly speaking that's including PPA and including the deal cost -- WhiteWall would cost us in the EBIT this year, you would expect us to reduce our EBIT range from 52% to 58% previously to 51% to 57%. We believe that we had a good start in the year. We can stick to the upper end. We would like to have some security at the bottom, so we extended the range to 51% to 58%. And whenever we're looking at risk, we're looking at the lower end. And whenever we're looking at opportunities, we're looking at the upper end of this bracket. And believe you me, the management of this company tends to look not only at risks, dare I say that. And the revenue is pretty easy. We just added roughly what WhiteWall is going to put into our books as of the 1st of June. So the range goes up by about EUR 20 million to EUR 675 million to EUR 710 million in revenue. Everything above that stays as it is. That's all rounding areas at best. And everything below that actually then works its way into the EBIT, the earnings after tax, the earnings per share, et cetera, et cetera, as one would expect that to be. So the key change in the target here is revenue and EBIT. And the message here is, yes, we see the risk but we would also like to keep the opportunity.And with that, as I said before, we will get to an EBIT development at the end of this year that would basically go ahead as one would expect with a strong consistently and continuously growing company. And you all know that we have suggested to the general assembly of our shareholders an increase in dividend from EUR 1.85 to EUR 1.95 that we -- the assembly will vote on, on June 5. And with this development, we have in mind that our shareholders should adequately profit from a good EBIT development in the future as well.And the weather is funny. It's photo-taking weather here in Oldenburg, and I hope this sheds sufficient light on the Q1 results for the CEWE share and the CEWE company. If there are any questions, I believe that they will be having an opportunity to ask those ASAP.

[Olaf Holzkamper, CFO & Member of the Board of Management]

I.e., right now.

[Operator]

[Operator Instructions] The first question comes from the line of Volker Bosse from Baader Bank.

[Volker Bosse, Co]

Volker Bosse, Baader Bank. Congratulations on the strong figures and the strong start into the year. Three questions from my side. I would like to start with your guidance. As you said, you baked in the WhiteWall acquisition, but why you are not a bit more, let's say, aggressive or ambitious regarding your sales guidance? I mean I hear you speaking about the seasonality shift, but given the strong start, given the strong turn towards higher value per printed photo, would it be not an opportunity to also increase guidance a bit more? Perhaps a word on that. And the second question would be on your acquisition of WhiteWall. Congratulations. I think a good step strategic-wise, fits well. Perhaps you could provide a bit more insight. I hear that also LUMAS was on the table. What's the rationale not to include also the LUMAS brand and the business behind LUMAS with the acquisition? And the third question would be on your smallest division, the others division. At the Capital Markets Day, you said you are looking at all options. So could you elaborate a bit more if there are any news or any update in regards to what's going to happen in that division would be helpful?

[Christian Friege, Chairman of Management Board & CEO]

Yes, Bosse, this is Christian Friege. As to your questions, the first one, I believe, is not too difficult to answer, and I believe that we are both on the same side of the fence here. What I tried to communicate was that we see an additional burden on our EBIT to the size of EUR 1 million. We put that not in the upper end of the bracket, but on the lower end of the bracket. And conversely, I mean we have a clear risk -- and something that is sure to happen of EUR 1 million in terms of negative impact on the results, and we are still keeping up the upper end. For our conservative way, how we look at goals and brackets and guidance, I believe that is somewhat aggressive. And we shall keep you abreast of the situation of the company in the next quarter and the next quarter and the next quarter, and we'll see what happens. And I think I was quite clear on the weather-related effects that impact our photofinishing business.Your WhiteWall question is very interesting, and indeed, I did not mention LUMAS because, as you have read in our ad hoc, we did not buy any of the LUMAS assets. LUMAS will be further operated by the founders of the company. And we believe that they bring the know-how to the table here that we don't think that we have. You've got to have -- you've got to be -- in our level, you got to understand about the art market. That's a very different market from photofinishing. You've got to understand about art retailing and galleries. They operate galleries in different parts of the world. We do not operate in different parts of the world, and clearly not with art galleries. And we've seen with the previous ownership that there is very specific know-how that is needed to make that a successful business. And I believe we should better stick to what we know to do and -- very clearly, and this is also shown on the Q1 numbers. This is photofinishing. And within photofinishing, the WhiteWall business is the one that we feel we can add value to, and that is why we opted to solely acquire the WhiteWall business. We will, however, continue to cooperate with LUMAS. And we are on the best terms with the subsequent owners of that business, and there are also those agreements in place that will allow us to keep producing the artwork for LUMAS.And your question regarding others. Yes, I am sure I did say that we are looking at all options because that's what we are doing -- we are still doing. And as soon as there is news, you will be among the first ones to read that in an adequate press release or ad hoc or whatever that is.

[Operator]

[Operator Instructions] Our next question comes from Thilo Kleibauer from Warburg Research.

[Thilo Kleibauer, Research Analyst]

I have very -- yes, 2 questions. One is on WhiteWall again. In the press release regarding the acquisition, you stated that WhiteWall is growing dynamically. Maybe you can give us a little bit an indication about the growth rate of the business we should expect for the current year or which they have achieved in the last year. And secondly, I mean the stores of WhiteWall are based in Germany. So the regional split of WhiteWall, is it similar with a strong business proportion in Germany? Or is it a good opportunity and a stronger base outside the German-speaking area? That's regarding WhiteWall. And then I have a question on LASERLINE, which yes, it seems to be a little bit the weak spot today. And you mentioned a weakness regarding LASERLINE. So what is the concrete reason there? Is LASERLINE losing customers? Or have they maybe already adjusted the prices? What are the actions you have to do there?

[Olaf Holzkamper, CFO & Member of the Board of Management]

Yes, Thilo, let me speak. There are -- please, Olaf here. The LASERLINE question first. Regarding LASERLINE, we have been already last year behind regarding our integration. And that is something that we still realized hopping over into Q1 of 2019 as well. That wasn't too easy. And the other point is, I think, you were mentioning it and we have had it in our communication -- our written communication to the outside world as well this morning. There is still this tense price situation, let's put it that way, in the commercial online print market, especially in Germany. And LASERLINE has a price positioning that is rather on the higher end of the market and that is the reason why. Obviously, a tense pricing situation has some issues there as well. And that's the reason why LASERLINE is experiencing some headwinds there. And for WhiteWall, Christian, do want to pick it up?

[Christian Friege, Chairman of Management Board & CEO]

Yes, sure. So WhiteWall, what we said in the release, if I'm not entirely mistaken, is that WhiteWall is growing dynamically, which basically means that it is slightly above the growth rates that we would expect for our photofinishing business. And we obviously have acquired that company because we are convinced it adds value to our overall business. And -- so that growth rate is slightly above the one that we would expect for our photofinishing. That is the reason. But the other reason is one that you are also pointing at with the second part of your question. Indeed, the pure WhiteWall stores are all located in Germany. But as I said before, we are cooperating with the LUMAS ownership, and we will maintain the presence of the WhiteWall product and also the WhiteWall sales activities as a store-in-store type of solution in the LUMAS stores worldwide. And with that, we feel that there is a very good market position within Germany, but there is also a good recognition of the capabilities of WhiteWall outside of Germany and going beyond the areas that we classically sell to. And one of those areas is the U.S. There is a bit of U.S. business, and we have no plan not to continue that. And so we feel that we have a good opportunity here, not only to grow in Germany, but also in other geographies.

[Operator]

There are no further questions, so I'd like to hand back to Dr. Christian Friege for closing words. Please go ahead.

[Christian Friege, Chairman of Management Board & CEO]

As I said before, we started well into the first quarter of 2019, and we are not entirely unhappy with that. You've asked a number of questions regarding our activities outside of the CEWE quadrant. I just wanted to focus your attention on CEWE and its core business. Despite all the activities around it, it is the core business that is a very good business at the same time. And I'm sure you will have an opportunity not only to take lots of photos over the next days and weeks, but also order a lot of CEWE photo products or WhiteWall products after the 1st of June if you so wish. And I'm looking forward to talking to you again, if no sooner, then certainly at our Q2 phone call in August, I believe. You have -- you all have a great day.

[Olaf Holzkamper, CFO & Member of the Board of Management]

Looking forward to your orders. Thank you. Cheers!