Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Transcript 2021-Q2

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

Welcome, a warm welcome to today's Q2 call of CEWE for 2021. As typically, we have a introduction from Christian, who is not only showing the latest and greatest developments that we have been experiencing over the last month but also he's putting the numbers into the overall perspective in there before walking through all the different segments and finalizing his pitch on the group results where I will add on there the financial details later on. For those who don't know me, my name is Olaf Holzkamper and our CEO, Christian Friege, is taking up the speech right now, Christian.

[Christian Friege, Chairman of Management Board & CEO]

Olaf, thank you very much. A very good morning to you all. Thank you very much for joining us for the Q2 results of the CEWE Group. And before I get into the numbers and the detail and the mechanics of the numbers, I'd like to show you a few photos. The first one is the advertising photo for CEWE Photo Award, CEWE Photo Awards being the world's largest photo competition now with a good distance to others with more than 600,000 photos submitted. And to me, the CEWE Photo Award is not only a great way to advertise CEWE but it is also a sign for the passion that we put into our business. We are passionate about serving our customers. We are passionate about innovation, as you all know, who are following us. We are passionate about sustainability. I pointed out some of our sustainability measures in our last quarterly call, but also at the Annual Shareholders Meeting. And we are very passionate also about photography. And if you look at the 10 category winners that I would simply and quickly share with you now, these are outstanding photos in their categories. And one by one, they are indeed photos that motivate -- to take photos that motivate to use photography as a means of expression, but also this one has iPhone in German, okay? This Egg Phone is the iPhone in German. And they are also photos that stand for what is important for us and is photography and a market-leading photofinishing group. We've had a very good press coverage of the CEWE Photo Award category winners so far, not only in Germany, but across all of Europe. Some of the headlines you can see here. GEO, Focua, The Daily Star, the -- today -- this morning was The Telegraph, derStandard, Opera News in France, Luzerner Zeitung, et cetera, et cetera. We've had a double spread in Focus 2 weeks ago. We've had a double spread in View this week. Here you can see the winning photo [indiscernible] View magazine and this helps us, obviously, to support the CEWE brand. However, let us look at the numbers before we get all too excited about photography in itself. And this slide will actually occupy us for some moments. We have tried to visualize 4 quarters for you here. In 2020, Q1 and Q2 and in 2021, also Q1 and Q2. And the green arrows going upwards are actually an increase in demand and the red arrows going downwards are actually a decrease in demand. And the more arrows you see, the more significant the change is compared to the previous quarter. And what you can see here is that none of these 4 quarters can actually be evaluated very simply against the previous quarter of that kind. Let me quickly walk you through this. In Q1 2020, we had the non-corona quarter. Remember, and only in February, early March, the crisis came about, and only in later March, the first lockdown was put in the effect. And we've seen a strong quarter for the CEWE Group with an increase in demand in photofinishing and KOD, which is our Commercial Online Printing, Commercial Online Doc. Photofinishing is obviously FF,and EH is Retail [indiscernible]. And we've had a strong quarter with a little bit of a dip in [indiscernible] in retail, but with very strong results of EUR 2 million in total EBIT. The next quarter, Q2 in 2020 was very much driven by the first strict corona lockdown all over Europe. And we've had the stay-at-home effect on photofinishing with a very significant increase in photofinishing demand. We've had almost standstill in our Commercial Online Printing division where upto 80% of the weekly orders actually broke away. And obviously, with closed stores, also our retail division was significantly below the comparable quarter 2019. Overall, the photofinishing drove us to a very good minus EUR 1 million result. Now in 2021, the first quarter we reported was again one of corona lockdown with very strong photofinishing, stay-at-home effects and a decrease in demand in Commercial Online-Printing and compared retail to the pre-corona quarter Q1 2020. And the different situation with all those arrows indicate how very different the basis of this quarter compared to the quarter 1, 2020 has to be looked at. Now in our current quarter 2, we see that photofinishing demand is actually going down. Why is that? Because we are looking at a quarter where everybody is regaining freedom, vaccinations to go about, people can travel more than they could previously. People are going outside. They are going to restaurants again. They are participating in sports events and so on and so forth. So the lockdown that we had a year ago is being converted into the easings where everybody goes out of the house. And so no stay-at-home effect, the contrary is the case, we see a drop in photofinishing sales. At the same time, we see that the Commercial Online Printing is picking up again. Indeed, in Q2, we have a 25.8% increase in sales in Commercial Online Printing. We have also a good result in our retail division. And those 2 divisions together have a positive impact on our bottom line of more than EUR 5 million compared to the Q2 the previous year. At the end of the day, the comparisons with the previous quarters actually are lukewarm, I have to say, in a way that so much changed around corona as so many corona effects have to be taken into consideration. And then at the end of the day, the comparability is difficult. And that is why we put the slide together to visualize for you what actually is happening here. Overall, if we compare the first half of 2020 to the first half of 2021, this year, we were a good million stronger in earnings than we were before. And how that is going to pan out in Q3 and Q4, we'll look at later. But I can say that much that Q3, 2020 was already a weakening a quarter as far as the stay-at-home effect is concerned. In fact, Q3, 2020 was weaker than Q3, 2019. And I will also show you what you -- most of you actually know is that at the end of the day, what matters is Q4. So this is the situation in the first 2 quarters. And I hope it helps you to see the different effects that we can see in our P&L that of course, we will go into more detail to explain now and how the comparability is actually strange this year. If we go further and if we go even further than that, we go into the detail as far as photofinishing is concerned. This year is the first year that the CEWE brand won -- was honored with 2 TIPA World Awards. I think we mentioned that in the Annual General Shareholders Meeting for our CEWE Calendar A2 Gold Edition and for the CEWE Photo Center that you can see here. And on top of that, we won a third TIPA World Award for WhiteWall for the RoomView function, where actually from your mobile phone, you can picture what it will look like when your WhiteWall will actually be mounted to your wall. Also, this actually brings us to 10 TIPA World Awards over the past few years, of which 5 were actually awarded to the group in the last 2 years, so the last year and this year. Moreover, I would highlight quickly that we have started a new partnership with Faber-Castell. Why do I highlight this? I highlight this because it is another token for the strength of our CEWE brand, Faber-Castell undisputedly is a premium brand and market leader in the colored pencils market. It's an old, very, very strong and established brand, and together, we offer metal cases with these colored pencils that you can actually put your any video, photo on the cover. I would also share -- like to share with you that we are very actively supporting our employees and are encouraging our employees to get vaccinated. We firmly believe that, that is the way out of this corona crisis, out of this COVID-19 crisis and we've offered to our employees a vaccination options wherever that with local legislation was possible in Europe. In other some countries that was not possible there, we actually focused on encouraging people to go to the public vaccination centers. And also, I would like to share what actually was a matter of focus this quarter, and that is our Great Place to Work employee survey. I'm very pleased to report to you that the employee satisfaction increased between the last survey and this survey. You can see the small little icon there at the very top of the good companies. We've now reached the very top of the very good companies and the benchmark of more than 1,000 companies. We are in the top 10%, top 8% probably. And that is something that is very important to us because it's a team effort that we are reporting about here, a team effort of about 3,700 people. And what was also very telling is that the participation rate in this employee survey was 84%. It was very significantly above that of the average good company. And also the summary question, this is a very good workplace. More than 80% agreed to that compared to 72% for the average of a good company. So that shows that not only try -- do we try to do the right thing for our customers and obviously, for our shareholders, but we also seem to be a company where it is good to work and that is a reason why we are passionate and why we are also delivering quality. If we move forward, we can look at numbers. And here, you can see what actually happened in Q2 as far as the number of prints is concerned. The number of prints decreased by 20%. And this is, in our mind, and I'll share some other numbers with you in half a moment, in our mind, very much driven by the lack of vacations, by the lack of new photos resulting there from, and by at the same time, the move of people outside of the house, all the old projects have actually been covered or they are not touched because it is more effective for people and everyone of us can understand that we now go out to now live some parts of the usual old life again that is now possible with the vaccine -- vaccinations going on. So we have 20.4% less prints. Still, we've been able to increase the value per photo by 6.2%, so that the turnover photofinishing is in inverted commas, please, only in inverted commas "15.4%". If we look at the first half, this is ease because you remember from the slide that I explained so much in detail. The first quarter was a lockdown quarter with the stay-at-home effect. And obviously, that is running against this Q2 effect. Overall, we have 3% less turnover in photofinishing. Then you can see that also the PHOTOBOOK was affected with 34.1% less CEWE PHOTOBOOKs in Q2 and 18.2% less CEWE PHOTOBOOKs in Q -- in the first half. And again, the classic multi-photo product fused the temporary lack of images due to vaccine -- vacation restrictions in the first half of the year, these are the photos that were then obviously also ordered. We can see that around Easter and so on and so forth. And we can also look at that from a different perspective because if you look at the airports, there is more flights going out now. If you look at try -- if you try to rent a vacation home, my goodness, this is really very difficult. Most areas actually fillled to the brim, people do want to go on holiday. They do go on holiday. And they will also take holiday photos, vacation photos again, and we will see the effects of that later on in this year and the next year. On the next slide, you can see again how this effect can be looked at. In the gray columns to the left, you see from 2013 to 2019 and our Q2 results in million Euros. EBIT from photofinishing, EBIT photofinishing Q2 in million Euros. It's been hovering around EUR 2 million loss in the past years, and that was actually what was expected in our corporate planning for 2020. What you've seen is the very significant increase in 2020 to plus EUR 5.1 million, an increase of EUR 7.1 million over the expected minus EUR 2 million. And this year, we would have expected the same EUR 2 million again. And what you can see is a minus 3.7% effect from loosening of the corona restrictions from the lack of a stay-at-home effect is the EUR 5.1 million to the top, minus 2 million is what is expected, minus 3.7 million is what is not coming. And folks, this has been expected. And those of you who participated in the Q1 call must have heard me say that we would expect less photos from vacations and less photos overall our photofinishing in our second quarter. Okay. If we look at the Q2 business segments, most of what's in here, I've said minus 15.4%. I said for the first half, minus 3 point -- for the first half minus EUR 3.0 million in turnover and the EBIT that you can see there. And then if we look at our expectations for the quarters, you can see that Q1 was very much in line, actually at the upper end of the expectation. Q2, as far as the turnover is concerned, was somewhat below our expectation but expect it to be going down. If you look at Q3, you can see that Q3 in 2020 was weak compared to 2019, et cetera, et cetera. This is the seasonal effect that we've been presenting to you for a long time. And you can also see that all this is of significant less relevance than Q4. And I can assure you, we are really focusing on Q4 as far as [indiscernible] that present that you can order from CEWE. Very well. I think that's it as far as photofinishing is concerned. We had expected a shortfall, and we have seen this shortfall. We will look at Q3 and Q4 at the end of the presentation. But I can assure you, at the end of the day, Q4 is what makes it or breaks it. I've shown you that Retail is actually improving in results. We have successfully, again successfully, I mean it's not a great job to do, but it's a necessary job to do we have ceased to operate 40 retail locations in Czech Republic, Slovakia and Poland and in Norway, Sweden. Despite that, we have gathered the same turnover in Q2 actually, there's even a sliver of an improvement over last year despite the fact that 48 stores were closed during that time and before that time. And we've also seen a very significant improvement in results, that coming actually from a previous year onetime effect for the restructuring that obviously is not applicable this year again. We've been successfully able to see some of that Retail revenue come to our online offers. Specifically in Q2, and we are convinced that our move to accelerate the development from a very retail store heavy retail division to a more balanced division that actually combines stores and an online presence is the right strategy to go. If we then move on to our Commercial Online-Print division. And you remember that we have SAXOPRINT as the big printing plant in Dresden with its Berlin brand LASERLINE, and we have Viaprinto with a service focus. SAXOPRINT has been successfully turned into a cost-leading position in industrial online printing, and we can see the benefits from that if we look at the numbers. Not only have we seen a 25.8% increase in sales in this second quarter, but we've moreover, seen a very significant improvement in profitability. And if you look to the previous years, 2017, 2018, 2019, of course, 2020 with the corona effects, none of these previous quarters, too, has been as successful commercially as successful as this. So we take the assumption that the restructuring towards a cost leadership position that we conducted during the last year, obviously, is working. And we take some good hopes from that for the coming 6 months of this financial year. Now if you look at the first half, remember the first slide with those arrows, first half, again, compared to the previous year, Commercial Online Printing was very much under the weather as far as the turnover is concerned. So the overall 6-month effect is still a minus 20.8%. But you can see at the bottom line that obviously even Q1 was financially a variable in terms of its outcome. And again, 2021 is the best first half in the last 4 years. Our strategy to focus on cost in SAXOPRINT and on service in the [indiscernible] seems to be working. If we put all these numbers together, I'll hang up. There's some other here I have to report to you about futalis, 28.5% increase in sales. The veterans among you know that this is all back to futalis. And again, futalis has also improved its profitability. We are now turning in a positive EBIT every month. And that is a little bit about what does some retailer in the U.K. say every little helps. Yes, that is futalis. Overall, the group results for Q2. Obviously, we have in Q2, a decrease in revenue. And I've explained to you all the building blocks of this at the same time, we have a increase. That is the group turnover in Q2. In the first half, there you can see we have a 5.2% decrease obviously driven very much by the Commercial Online-Print in the first quarter and then photofinishing in the second quarter. And then if we look at the results, you can see that Q2 was EUR 5.5 million worse, as I explained to you in the big slide with the arrows. But overall, we are EUR 1.1 million still ahead of last year. And we're obviously ahead of all the previous first halfs that we have recorded here since 2017. . Okay. With that, I hand over to Olaf Holzkamper, who will explain to you all those financial details and the balance sheet, et cetera, that are now still missing. Olaf?

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

Thanks, Christian. And moving into the financial details, looking at the income statement first. The big takeaway from the income statement is that all the movements in there can be completely explained by the things, most things that we have heard already or other additional information, it's no structural change in the P&L whatsoever. Walking down from top to bottom, you can see at the very top, the reduction in revenue, and you are aware that due to the effects that Christian described to you, photofinishing was down, especially compared to last year in revenue and Commercial Online-Print and retail were slightly up. So that means that we have some structural change here in the composition of the revenue in the group on the group level overall. And that is going to reflect on the next lines we are looking at. Moving down further, we are finding that the other operating income has changed, has improved a little bit by EUR 2.1 million. That is a normal movement. We see over time, we have the release of provisions for allowances that is mostly driving this factor here, but also we sold some of the fixed assets in terms of machines and so on, as we always do. So that's the typical fluctuations we have there plus additional recyclable material, paper and so on, and sales. Letting all in all, it was all on the positive side. So that adds up to an improvement of EUR 2.1 million. Now let's look at the structurally important lines in there. Cost of materials. What you see there is cost of materials overall is a less cost by EUR 2 million, being reduced to EUR 31.5 million. That is mostly driven by the business reduction, which means the revenue reduction. So that makes sense all in all. In addition to that, it was a bit increased last year due to the allowances of the inventories in retail that we communicated to you. So that is the main reason why we have an improvement "of material costs here by EUR 2 million". In terms of percent of revenue, that is increasing though from 25.7% to 27% of revenue, which is due to, one, the decrease in revenue, but two, also the structural change in the revenue composition as we mentioned in the beginning, Commercial Online-Print and retail have a higher share on the revenue, and those are the 2 segments that typically have a higher material cost because they're value added in that sense, it's not as high as in photofinishing. And that is also driving this increase in percent of revenue. So there is 1 explanation for this structural change you might see there. Moving on to the personnel expenses. You can see there is an increase by EUR 1.5 million. That is not a lot, obviously. And if you look at the first item in there, exercisement of stock option program that is already explaining that position there due to the way these needs to be booked for and calculated. Obviously, the starting share price, it's putting the nail into the wall. And if share price increases, it increases the cost of this stock option program. And that happened this year, whereas in the last year, it actually went the other way around, share price went down due to all the things you know. Share prices in Q2 last year, I think you're all aware of the direction it took compared to February and beginning of March. And that was booked as a positive personnel expenses in last year. Obviously, that explains already this difference we can see there. Plus, we have some other positive effects -- we had some other negative effects like short-term work and tariff adjustments. And the positive effects we have had, we are seeing in Commercial Online-Print and retail due to the optimization movements we have been taking in those segments. They have not been able to fully counterbalance the price -- the cost increases in personnel costs we just mentioned. So all in all, a slight increase in terms of personnel costs. In terms of percent of revenue, that is an increase from 33.3% to 38.5%, which is mostly driven also by the reduction in revenue that we have been discussing plus on top of that, the increase in personnel costs. So no big structural change in either. If we look at the other operating expenses, we do see a first sight big change of EUR 5 million there, which is EUR 5 million less, less than other operating costs. But if we look at where that has to be derived from, we see a business-driven decline that is completely normal, which is mainly the mail order cost that obviously, especially due to photofinishing being low in Q2. We had a strong reduction in mail order costs. And that makes sense because if you look at a percent of revenue, we see that we kept the percent of revenue line pretty much stable on the 34.6% after 34.8% in Q2 of last year. So there is no structural change at all. It's purely driven by the business volume overall we had in Q2. In amortization depreciation, a slight improvement by 0.9%. That is to a large degree already driven by the retail restructuring we had been doing last year, which can be seen there by a level of EUR 4.1 million. All in all, that is doubled by the other effects we have seen but nothing major to be seen there. So this is the income statement, no structural changes in there visible that cannot be explained easily. If we move to the balance sheet, I'd like to go through quickly here, and I'd like to highlight the effects of corona. Christian highlighted to you the effects of corona regarding the P&L and what does it mean -- what did it mean to the P&L structure. I'd like to highlight what corona meant to the balance sheet structure here, in comparison to the balance sheet of a year ago. And looking at the changes here, we have a reduction of the balance sheet overall in terms of assets of minus EUR 3.6 million now to a level of EUR 487.8 million. Now that reduction is driven by the minus EUR 5.7 million in noncurrent assets, the yellow part on the left-hand side. And if we look where that is derived from, you see the first box on top there, is mostly scheduled depreciation, be it -- be intangible assets like software PPA assets or any other fixed assets, but it's all scheduled for, and this is the way it went in the last years as well, plus changes in income taxes, we had the book for end of last year already and some valuation changes in all these. We see fund activities or high-tech founders fund activities that have been reported to us by those funds. So there is not any major change. The changes due to corona are visible or I should say, are not visible actually in the current assets because down there on the green current assets, do see an increase of EUR 2.1 million only. But in there, is big change in terms of the increase in receivables from income tax refunds. There's an increase of EUR 6.8 million, and that is not visible here because it was paid for by a decrease in liquid funds there. So we needed to pay, again in contrast to last year where there were a lot of tax postponements offered by the government, which we took just to be on the safe side in Q2 last year, you remember nobody knew last year in Q2 how life would go on. So we took those security measures that were offered to us i.e., we did not had to pay those tax prepayments. But now we said, life is back to pretty much normal again. We are on a normal schedule. We saw last year that we had a normal schedule of the year, though there were the shift. But all in all, there was a normal year, it was all fine. And so we did pay our taxes this year as in every other year, and that obviously is many more tax payments than we had last year, and that's the reason why we had this increase by 1.6 -- by EUR 6.8 million in terms of receivables from income tax refunds. And in addition to that, there is [indiscernible] an increase by more than EUR 2 million in terms of inventory because looking at on-site photofinishing, our CEWE PHOTOSTATIONS at the retailers, we need to be sure that we don't get out of paper towards the end of the year, and that's why we had a bit more stop there in terms of paper to ensure our business throughout this year. That's the reason why actually on the asset side here, on the left-hand side of this table, you can see some roughly EUR 10 million of increases in receivables from income tax payments as well as inventories, some EUR 10 million increases on the asset side due to corona. And if we look on the right-hand side here, that is obviously nice to be see there's the increase in the equity. We can see there EUR 27.8 million increase in equity up to nearly 60% of equity ratio right now, which is a nice development. We love to have a stable balance sheet. That's the first big takeaway here. And the next big takeaway is not to look through all the details. But if you look for where do we see corona actually in this year again, you can look at the blue points on the right-hand side, we see that we have trade payables due to the lower volume we have had there, we have a decrease in trade payables there, which obviously need to be financed for in a different way. And in addition to that, somewhat below, you can see that in terms of short-term liabilities, we have some decrease there as well as we have -- we had the troubles for social digital security last year. We don't have this year. So there's another payable, which we couldn't build up this year, which we could build up last year. So there is some, if you add those 2 points, there is some EUR 15 million in terms of payables, in terms of liabilities that we were able to build up there last year and due to corona, we weren't able to build this up this year. So there is EUR 15 million on the liability side that needed to be financed for. There's EUR 10 million on the asset side we just looked at that needed to financed for makes sum of -- a total of EUR 25 million, all in all, that needed to be financed for comparing this year's balance sheet mid of the year to last year's balance sheet mid of the year. And that is partly driven -- this change is partly driven by the changes we have seen in the government support, a lot of support last year for everybody, basically no major support this year. That's 1 driver. And the other driver of that is due to all the business changes that Christian walked through, there's many liabilities and so on which we haven't been able to build up really. So these EUR 25 million needed to be financed for, and they were financed for, they were paid for basically by the equity increase, the EUR 27.8 million increase in equity we just looked at. So this is the effect of corona on the balance sheet. And if we look at the management balance sheet, I tried to take a very short cut here because actually, the whole corona effect is very much nicely summarized in the net working capital down there. If you look at the light green on the left-hand side, you see net working capital in last year, end of June on a level of minus EUR 13.6 million, and it increased now to EUR 18.8 million this year. So there is a change of EUR 32.5 million in there. And that is, if you deduct the change in payment to shares for the acquisition of the last year's shares that we have taken in this year's time. Then you are back again to an increase of EUR 25 million in net working capital from last year's midyear to this year's midyear. And this increase is exactly due to the 4 positions we looked at on the chart before. So corona, in terms of comparing year-on-year, corona leads to a financing need of EUR 25 million for us, which again here on the right-hand side, capital invested, you can see that the investment happened through the equity that we had increased by EUR 27.8 million due to the strong Q4 business end of last year. So this is the corona changes we have seen on the balance sheet. And if we move to the cash flow now, and we try to find out what's happening there. Obviously, you can see just looking at the cash flow from operating business on the left-hand side, wow there is a big change. And this is pretty much what you have seen with the, for instance, photofinishing EBIT chart that Christian showed to you, last year, EUR 18.1 million was extraordinarily high, easily to be seen here. If we look at the minus EUR 24.8 million operating business cash flow that's extraordinarily low, obviously. And the difference [ in there ], the EUR 42.9 million difference there is explained by the box on the left-hand side and also there again, mentioned by this or indicated by this blue color, you can see there's a lot of corona effects, basically, there's only corona effects in there making that difference. So if we look through the cash flows, you can see in the detail that there is more than EUR 20 million i.e., exactly half of this EUR 42.9 million difference, more than EUR 20 million are due to the additional tax payments we had to provide to the government this year again because the tax support did not happen again obviously. That's fine. We don't need a defer in tax payments. We did that, and this is to be seen here in terms of cash flow as well. Then we have the increase in other net working capital that we looked at. We have in this Q2, we have had a lower increase in tax sales liabilities, obviously. And in terms of last year's deferral of social security that didn't happen again, so we did have to pay for that as well. We didn't have the increase in liabilities that we had last year nicely supporting our cash flow. It was purely corona-driven. And the last point on there is mentioning the operating net working capital. There's many trade payables, which we needed to pay for due to the big mail order business, we needed to pay for a lot to our retail partners this year, which were visible nicely as a payable last year because we had the big mail order business in Q2, which was, if you recall, the lockdowns correctly, people were not going out but creating the nice photo products at home and having the photo products delivered mail or otherwise to their homes. And that volume, a large part of that volume, was visible here as a nice payable supporting our cash flow in Q2 last year. So those were the different items explaining the big decline first visible on first sight, this decline here, but it's not a real decline. Last year, again, extraordinarily high, this year extraordinarily low and the -- that the normal is pretty much in the middle which shows it is a normal level if you take the average. Moving on [ lever ] on to the cash flow outlook from investment activities. There is a decline of EUR 8.8 million, but there is nothing structural behind. It's just a little bit of operational cash out for investments here. And then there is all the other items that tend to counterbalance in the cash flow here. All the major items were on the positive side, like we had some backlog from our financial assets, we had some sales of machines a bit higher than we normally have. And it's these things that added in addition to the operationally reduced investments we have there. But all in all, it's not a structural change we can see there. So adding the 2 changes up, it means a movement from EUR 4.5 million positive cash flow -- free cash flow last year, now down to a level of nearly EUR 30 million negative cash flow. But again, -- it was -- last year was corona-driven, and this year was corona-driven pretty much to the same extent. And the truth somehow is in the middle, if you just look at it that way. Moving on from free cash flow to the ROCE. You can see, yes, we had a strong last 12 months EBIT. There is obviously the successful Q4 of last year in there leading to a 12 months -- last 12 months EBIT of EUR 80.8 million. If you divide that by the average capital employed over the last 4 quarters, you end up on this nice level of EUR 20.3 million ROCE, and that gives a feeling for where the operational strength of the business is for that [indiscernible] . And with this walk through the financial details, I'd like to hand over back to Christian again for the outlook.

[Christian Friege, Chairman of Management Board & CEO]

Yes. Thank you, Olaf. We are showing you the slides that we've seen before. This is the long-term development since 1990, where you can see that the digital photofinishing is still driving the growth of our group. And we have no reason to assume that, that is not and will not be the case for the future. You can also see on the next slide, the EBIT development with a very strong showing in 2020 and our expectation that we will be actually landing somewhere between EUR 72 million and EUR 84 million in EBIT this year again. And let me show you why we think that, that is still the case, and we have absolutely no reason to deviate from this view. You have seen, when I look at the photofinishing that photofinishing in Q3 already had somewhat of a little decline in terms of sales compared to 2019 and 2020. And I would expect that we will be more or less seeing something that is somewhere expectable in this Q3. But most importantly, Q4 is what makes it or breaks it. And Q4 is a business that is very much driven by Christmas presence, that is very much driven by photofinishing products as individual personal gifts for the Christmas season. And we will see at the end of Q4 where we are. At this point in time, we are not really concerned. We are a EUR 1.1 million ahead, we have a fair view of the development into the Christmas business. We have a fair view of our preparation for the Q4 business. All what we see here is more or less as it is expected. And so as we would say, why is the results are completely different from last year? And whilst we were trying to explain to you all of those ups and downs and special effects and cash effects and all of those things, it is hard to compare but we are on a good track here at CEWE, and we absolutely clearly confirm our expectation for 2021 as far as the EBITDA. And on the next slide, you can see that as far as the EBIT is concerned, as far as the revenue is concerned, we think that this is actually going to be the outcome of this year, and there is no change in that. So with that, thank you very much for your time. Thank you very much for attending this conference. And for the rest of this summer, I wish you a great sunny summer. Take a lot of photos order a lot of CEWE PHOTOBOOKs, and then we will all be fine. Thanks, and have a great day.

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

Perfect. Thank you. Stay tuned, good summer.