Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Transcript 2022-Q2

[Olaf Holzkamper, executive]

Christian, who is in this call with me, our CEO, Christian Friege, is going to elaborate more on that in a second. The order of topics is, as we always go through it through the different segments. Christian is going to reach you through that. And I'm going to run you through the details of balance sheet and cash flow on these things. And before I pass it on to Christian, Axel told me that I should mention, we are recording this presentation and we are stopping the recording after the presentation. So the Q&A discussion is not going to be recorded.

And with that, Christian, it's yours.

[Christian Friege, executive]

Yes, a very good morning to you all. It's a great pleasure to have you here to see you, at least some of you, I can see and to guide you through some of the details of our Q2 performance. And indeed, as Olaf has pointed out, what we can see is that traveling becomes [indiscernible] again that people are on the road. But it is not only that which makes our numbers look like they look. There is a number of developments.

If we look at this from a bird's eye perspective for Q2, you can see on the left side of this slide that our turnover grew by 13.1% overall. And this is the combined result of all our different divisions' growth. You can see that our photofinishing grew by 8.2%; retail, plus 4.4%; commercial online printing by 52.5%; other rounding areas, so the total is 13.1%. So there's growth in all divisions, and this is both a recovery from corona, including the traveling picking up again. But it seems to me that we also have taken some good strategic decisions over the past 2 years that start to be paying off.

If we look at the results on the EBIT side, all the business not only show a growth in revenue on turnover, but also in EBIT, which gives us an improvement of a total of 2.1 million for the group overall.

Let me look at some overall riding aspects. The first one is a question that's been posed by a number of people asking me over the past weeks, probably even months. And that is -- now we are looking into a somewhat weaker economic outlook. People are even talking about a recession. What would that do to the business of CEWE? Now the answer is very clearly, I have no clue, but there are some indications, and let me share these indications with you.

First indication are observations from the past. If we look at the euro crisis in 2009, or COVID crisis in 2020, in both cases the overall economy in the Euro 17 group of European countries, the GDP development was a negative one. So the economy shrunk in the Euro 17 countries, whereas our growth was still there. Why would that be? There are a number of reasons here.

For our current economic situations, I would share with you that as far as photofinishing and retail is concerned, we are not looking at selling the umpteenth T-shirt that people can really easily go without. We are not looking at replacing the aged e-bike that people can postpone by a year or 2. But we are looking at a somewhat different product. We are looking at a product where people actually are conserving their memories from the trip that they have planned for 2 years. And now this year, they're actually doing it.

We are looking at Christmas gifts that have been -- that can only be given for this very Christmas, the calendar for 2023 that you are not giving away this very Christmas. You can't give that as a present in summer 2023. It's gone then. So there is -- my mother-in-law, she has this nail in her wall for the annual calendar that she gets from us, and we wouldn't ever want her to go with an empty nail next year.

So we are looking at products that have a relatively low price point compared to the e-bike, that have clearly a timeliness in terms as far as Christmas is concerned, that has an individualistic present value that is clearly greater than a 50% -- EUR 50 bottle of perfume and they have not the option of postponing them.

We are looking at products that have this specialty and this may be somewhat of the explanation why it is that in 2019 and 2020 we were not anywhere nearly as significantly impacted by the recession, as you can see on those observations on the right-hand part of the slide, as other people would have been. This is photofinishing and retail.

Now commercial online print. We've seen an increase in revenues of 52.5% for this quarter 2. We have managed -- and I'll show you this in more detail, we've managed to lower the amount of revenue that we need to turn into profitability. We've really cut back our fixed costs, and we've really done our cost work in that division, and that pays off and gives us also, including the fact that people who want to sell needs to do advertising and that we seem to be growing faster than the market here, gives us some confidence in that the recession will not automatically be a recession for CEWE. On the contrary, we have repeatedly proven in the past that the company is typically not affected by a downturn in general consumer spending.

This is an important piece of information. Again, as I said, I do not know, of course. But there are so many indications here, but I can assure you that we are planning for a strong business in Q3 and specifically in Q4. This is one thing that we've been asked about a number of times in the past few weeks and months.

The second thing that we've been asked about is supply, and we've discussed this in this update previously and also price for supply and cost of supply and then price to our customers. We've been working for the past months very carefully and very consciously strategies to implement price increases. We've implemented a number of price increases across Europe. We've agreed with our trade partners on other price increases, additional to what you can see already. And we are able -- through this to compensate for cost increases. This is, again, an important piece of information for you.

We've done market research. We've done a lot of thinking back and forth. We have not gone out and say there is a 6% price increase across the board. We've looked at what it is that we can actually implement successfully in the market, and this is what we are doing.

We've also ensured and this is an important information, we've ensured that we have our supplies lined up for the balance of this year. So we do not expect to be held back by supply shortages, specifically not by potential energy cutbacks. We've done a careful analysis of all of our production plans. And we have implemented alternative power supplies where we are dependent on potential shortages, so as to ensure that throughout the balance of the year, we can actually produce for our customers. And that is very important for us.

While implementing our price increases throughout the year, one of the things that you have to keep in mind, we are working on your models is that obviously a price increase that we implement throughout Q2 will only take the full effect in Q3 because it only obviously covers part of Q2. So what we are doing is we're ensuring that everything is in place by the end of Q3 so that we actually have a stable business for Q4.

We are proud that we have once again been chosen by Financial Times and Statista as one of Europe's climate leaders. And this has been happening actually for the second time in a row so we've had this badge already put on us last year. And for the third time in a row, we were honored as for exemplary corporate management, specifically in these times where life at CEWE is a little rougher than usual. This is something that we, as the Board of management, take some pride in because externals like Deloitte, WirtschaftsWoche, Credit Suisse and the Bundesverband der Deutschen Industrie have looked at us and have said this company seems to be quite well managed.

And last but not least, we have not discussed in this group that we had a small M&A activity towards the end of Q2. We took over a smaller supplier for our CEWE photo station, a company called Hertz. And Hertz is actually located halfway between Oldenburg and Bremen. So I wouldn't say within walking distance, but quite close to Oldenburg. We'll keep Hertz as a separate center of excellence and the takeover, which was in the course of the old owner of Hertz retiring and the succession situation. We actually will use this as a strengthening for our technology platform for the CEWE photo station.

The duality of our lab work and our instant printing is actually one of the strengths that we have in our omnichannel strategy.

Now we are already getting to photofinishing. If we look at photofinishing in more detail, I can report back to you that we were also honored with the German Brand Awards '22 as a winner for our cooperation between CEWE and Faber-Castell. Some of you may remember that we introduced this product last year and that we had this metal case for the pencils here that you can actually put your personal photo on.

More importantly, for the fifth time in a row, we were awarded with a TIPA World Award for our photofinishing work at the CEWE brand, this time for the CEWE Photobook Slipcase. So now for the CEWE photobook XL, you can design your individual slipcase. In this case, it is the same photo that you are using as you do for the cover of the book, but you can also use something different. You can completely individualize the slipcase. And again, this is something that nobody else has. The TIPA World Award we were awarded for the fifth time in a row, as I mentioned, it's the 11th TIPA award that the CEWE Group, including WhiteWall got awarded over the past few years.

Also important, we started our new round for the CEWE Photo Awards. You remember this is the greatest photo competition in the world. We had more than 600,000 photos being handed in from the last round. That got us from '22 to -- '20 to '21. This time, it's '22 to '23. So by the end of May 2023, we hopefully have collected again more than 0.5 million photos from everywhere in the world. And I can assure you that this photo award is increasingly supporting the CEWE brand as the photo brand worldwide and has become quite prestigious to be awarded the CEWE Photo Award. And this is something that we are very happy about, a big supporter for our brand management.

Looking into numbers that I know that this is something that is specifically interesting for you, if we're looking at the Q2 number of prints and turnover, you can see that the number of prints grew by 10.7%. You can see that people are taking more photos. You can see that this is a clear outcome of more festivals, of more celebrations, weddings, birthday, big birthdays and also specifically more traveling is visible.

What we don't see as yet is 2 things. We are still letting the archives because the archives are empty now. The archives are empty, that had been emptied over the last 2 years; and secondly, long-range traveling is missing still. So people are traveling throughout Europe. They are traveling somewhat to the U.S. as we can see. When I go to the lab, I look at the pile of CEWE photobooks there and then I see where are people traveling to. So there is some U.S. traveling there. There's a lot of Europe traveling, Germany traveling. There's hardly any to Asia, Australia and those destinations that we used to get specifically fat CEWE photobooks from. So there's more prints. There's a little less value per photo. Clearly, it's the fat CEWE photo books that we are lacking.

It's also a shift from away from wall decor. Of course, 1 photo gives us 20, 30, 50, 100, EUR 150 in turnover, but wall decor was a product that was specifically successful throughout corona and is now not growing as fast as the single prints and the CEWE photo book.

Overall, the turnover in photofinishing plus 8.2%. We are reasonably happy with that. And we see this as a good step of recovery. And if you compare this with 2019, which was the last Q2 before corona, you can see that in the turnover in photofinishing, we are surpassing the pre-corona times in Q2 already.

That's also the case if we look at the first half of the year. Whilst we are slightly behind 2021 if the turnover photofinishing, we are ahead of 2019. Why would we be behind 2021? Remember, in the first 3 months of 2021, we had a harsh lockdown throughout Europe. People were confined to their homes, and they emptied the archives wherever there was a photo that was not yet put into a CEWE photo book. Those first 3 months of 2021, we've always looked at an exceptional performance, and we have not seen that this year, of course, again. But compared to 2019, we are ahead.

We see a similar development in total prints and value per photo, as I've shown you before, we are basically as far as the value per photo is concerned are par on the previous year. And also the total prints is a rounding error, wait for the Q3 results.

If we're looking at our flagship product, the CEWE photo book, again, it is the long-range traveling and the archives that I mentioned that are leading to us still lagging behind 2019 but compared to 2021, in Q2, we are catching up. And so the gap to 2021 in the first half of the year is narrowing.

We're looking at the business segment photofinishing, here you can see again that we are ahead of 2019 in turnover by some EUR 4 million or somewhat like 4-point-something percent. We are slightly behind 2021. Again, the first 3 months in 2021 were an exceptional performance. And as far as the EBITDA is concerned, we are better than last year in our Q2. We are not quite where we were in 2019. Why is that? Because obviously, as I explained earlier on, we have the cost increases, and they have probably been adapted to the whole of the Q2, where some of the price increases only kicked in throughout Q2 and we have some effect of that to be seen for the balance of the year.

Same you can see for the first half of the year, on the next slide, where we are ahead as far as the turnover is concerned, and where we are not very far away from where we were in 2019 is EUR 3.6 million is the gap between plus EUR 1.8 million and minus EUR 1.8 million for the first half of the year. We are having these effects that I explained to you about cost increases, price increases, et cetera. And we still obviously have the long-range traveling and the empty archives.

Overall, if we are looking at this compared to our plan, we are absolutely on plan for our photofinishing performance both in Q1 and in Q2. Again, we were not expecting a lockdown in Q1. We are in Q1, as you can see ahead of 2019, we are in Q2 ahead of 2019 and we will work on the slight lag in margin, as I explained to you as far as the prices are concerned. So that leads to us that we are actually on track to confirm our targets come to that later on again. But you can see why that would be that we feel confident that we can deliver as we had expected to deliver. Same and by the way, if you look at the next slide -- we've seen that, okay, good. That's photofinishing.

Now commercial online print, a whopping 52.5% increase in our sales in commercial online print. You can see here what I alluded to earlier on. If you compare 2019 and 2022, you can see that we have not yet increased our sales, EUR 25 million versus EUR 20.8 million. But if you look down to the EBIT, we've actually lowered the hurdle for profitability, and that was the goal with our focus on being a cost leader and price leader.

So whilst on EUR 25 million in 2019, we lost EUR 1 million. On the EUR 20.8 million that we made this Q2, we actually made a slight margin. So we are on track to actually convert our low-cost strategy also in a strategy for profitability. At least this is how we would interpret these indications. The 52.5% increase in sales is obviously a return to more normal business compared to 2021 or 2020. But it is also that we can see that our cost-leading and price-leading strategy brings us increasing new customers to our commercial online print. If we look at the first half of the year, we have an almost similar increase in turnover to 45.9%, and we have the same effect as far as the hurdle for profitability is concerned, whilst we are significantly lower in our sales, we are significantly better in our EBIT performance.

And as far as the retail is concerned, you remember that in COVID, we have decided to cut back on our retail, the number of our retail outlets. We now have 100 own retail stores in Norway, Poland, Czech Republic and Slovakia, and 1 retail store, the Belgian store, that's the root of our company founded in 1912 here at Oldenburg. So that makes a total of 101 on retail stores. And we've balanced -- we have rebalanced on our strategic approach the number of retail outlets that we physically have in the field and our online business that is complementing these retail stores.

What you can see in our numbers here is the hardware sales, remember the photofinishing sales that come from this business are including the photofinishing number. Now as far as the hardware sales are concerned, we have actually compared to 2021 increase by 4.4%. This is somewhat contrary to the market because in the photo hardware market, specifically the market for cameras and lenses is still one that is contracting. There is still a move from photo cameras to mobile phones visible. And with this increase, slight increase in revenues, there is also a slight improvement in profitability. And if we compare this to the pre-COVID times, again on the basis of a slightly lower revenue that is in line with our strategy, we have actually held up our profitability or even somewhat improved that.

Same is true if we look at the first half of the year here. Same is true for the first half of the year here, we've increased revenues steadily by 4.2%. We have improved profitability. We have also obviously not benefited from social security, short-term work payments, et cetera, et cetera, in 2020 to the extent that we've actually done this in 2021. So there is no -- hang on, so we have not benefited to that extent. So the underlying improvement in profitability is probably even somewhat higher.

And then we have other in sales is typically Futalis. This is on track. And so if we look at the group results, the balance again compared to 2019 and 2022, is that we've reached about the same sales as in 2019 this past Q2. And it is slightly different in its composition. And there was a little bit more photofinishing and a little less retail and commercial online print. As you can see, total compared to 2021 is plus 13.1%. And this is obviously exceeding our target and bolstering our confidence to reach overall annual results.

Same is with H1 in the first half of the year. The delta between 2019 and 2022 is not very significant anymore. We have increased our sales by 3.2% over 2021. Again, we are smack on within our target range. Actually on a slightly more positive end of the target range. And also, this bolsters our confidence for 2022 as a whole. If we look at profitability on the next slide, we can see that the same applies to profitability. The delta between minus EUR 3.4 million in 2019 and minus 4.3 million in 2022 is now narrowing to a rounding error. Remember, what we typically do in the fourth quarter, and the same applies to the 700,000 delta in H1 between 2019 and 2022.

This is all very much on track with what we would expect and what we would hope for. And so overall, we are not entirely dissatisfied with our performance in Q2, and we take the indications that we get from traveling from the order intake, et cetera, et cetera, that we see towards the end of Q2 as an encouragement for confirming our targets for the whole of the year.

And more details to this as Olaf now when he looks at the management balance sheet and the consolidated income statements and more financial figures than you can all dream of.

[Olaf Holzkamper, executive]

Thank you very much, Christian, for walking through the segments and the group numbers. Now staying on the group number level and looking at the different lines of our P&L. First, as we always take us in there, on the revenue side, starting at the top, you have seen already that we have increases from all segments in terms of revenue. So that's a nice development there. Moving further down, there's a little change in the own work capitalized. You see the EUR 0.5 million we have added there compared to last year's Q2. And the reason for that is, to a large degree, the acquisition of Hertz. Hertz, obviously, is now in our own group. They are building the CEWE photo stations that you can see at the retailers that we are installing there. And for that reason, this is now not a photo station anymore, but it's built by ourselves, and that's why it's capitalized now here that is going to grow over time, this position there. As far as we have it now, it's the first time consolidation in there. So that's 1 thing you might be interested in.

Then if we look at the next line, other operating income, you do see the increase of EUR 1.8 million here, which is not tremendously a lot, but it's composed of many different sources. There is provisions we have no longer required anymore. There is an increase in services built to our retail partners, for instance, which increased due to all the cost increases on our side as well. We have increases in rent that we do see in there. So you have many, many different sources. There's none to highlight as the big 1 there. That's additional other operating income.

And when looking at the cost of materials, there is an incidence by 7% in terms of material costs. And that is the biggest increase we do see in here. The reason for that is obviously the increased sales first of all that we experienced comparing to last year's 2Q. And then we're obviously looking at price increases there as well and both drives the increase in cost materials.

It's potentially worth mentioning that this the only increase where we do see an increase in terms of percent of revenue as well from 27.1% to 29.5% due to the reasons I just mentioned. For all the other cost lines, which we're going to go through now, although we do see increased costs there, like in personnel and other operating. Although we do see increased costs there, due to the increase in revenue, we see a decrease in cost in terms of percent of revenue there. So you see there that the cost of materials is an important move here.

Now moving 1 level down to personnel costs, which we mentioned already, we do see an increase there of EUR 2.7 million, and that is due to, one, we have a little bit of more personnel in central functions in Hertz, for instance. And we have had the tariff adjustments like in many other occasions in Europe as well. There's personnel costs moving one down to other operating expenses there. We do see the increase here quite significant by EUR 4.9 million. And that is also due to a bunch of things. If we look in there, we have, for instance, in our real estate, we have the higher occupancy costs for maintenance and all these things. We have higher energy costs as everybody has. But due to the fact that we are allowed to go and visit fairs again at exhibitors, we are restarting our trade fairs as well, and so we do see price increases there as well. So as a bunch of things we have in other operating expenses. And also the commissions for our selling driven by the sales increase has been rising over time.

So a lot of the other operating expenses are due to back-to-normal, getting business up and running again. Moving further down, there is no big move anymore as far as different cost items are concerned that we would need to go through in a great detail there, I think.

I think what we can see is, if you recall the chart that Christian just showed to you that in the corona times, we had big ups and downs on the EBIT level. We had like minus 1.0%. And so it was up in our terms for Q2 where the minus 6.4 which is a bit down. And now we are on a minus 4.3 level again here in terms of EBIT this year in Q2, which is kind of back to normal. So we don't know how corona is going to go on for the next months and years, obviously, but what we can see here on the P&L, for instance, is some kind of back to normal with the P&L level, and we're going to see more of that if we look at the cash flow in a second.

But before that, after the P&L, let's look at the balance sheet. And on this balance sheet here, which is the normal balance sheet, as we all know it, I don't want to go through these details. The only thing I'd like to highlight to you is the red number you see on the right-hand top, in the last bar there, 60.1% equity ratio after 59.8% equity ratio last year. So that is an increase again in equity ratio. If we hadn't bought back the treasury shares, we would even be at 64% in terms of equity ratio. So that is a solid balance sheet that we are looking at here. And we are happy to be able to rely on this balance sheet. It's really solid.

If we look at the details of what happened there to some degree, let's look at the management balance sheet, where we are moving, especially the networking capital items from the liability side over into the capital employed on the left-hand side into the asset side here. And in that way, you can see that many of the movement we are seeing here are somehow related to corona.

If you recall our last presentation in the last quarters, we mark these kind of movements in there in blue color. And if you look at the left-hand bottom, you do see a lot of blue there. So a lot of -- the number of changes you see there are due to corona and mostly, it means due to corona fading out and the effects fading out again.

So let's look at somewhat the details. All in all, you see that the capital employed has increased by EUR 29.3 million, as you can see on top of the left bars. Now where does the increase come from? Obviously, noncurrent assets, EUR 4.4 million, it's not a lot. The movements in there are mainly due to the building we had acquired in the last 12 months and the Hertz acquisition we had done, being counterbalanced by somewhat an increase in deferred tax, by decrease in deferred tax assets there. So that's the EUR 4.4 additional million in noncurrent assets.

In terms of cash, you do see that we have increased the cash by EUR 6.6 million That is not so much operationally driven. It's a little change in our cash. Consolidated cash -- way of handling cash, we had some changes in the banks there. Some Scandinavian banks are withdrawing from Germany and some German banks are withdrawing from Benelux. And in order to rearrange all those things, there was at 13th of June, somewhat more cash in the bank there, but that is going to be reduced over time again. So that's the reason for the EUR 6.6 million additional cash we are seeing in there. And that's not going to stay probably.

But then the biggest increase at the bottom, you see the EUR 18.3 million increase in net working capital. And here we're bringing all together the net working capital in total. So the EUR 18.3 million is composed of many blue items as we can see by looking at the box underneath. There is, for instance, the upper net working capital, where you do see an increase of EUR 11.8 million, and a lot of that is due to the tax position. And just to highlight this one thing that's happening there, then you see how there is many corona details behind, for instance. Due to the corona, we had a high profit in the year '20, as you know. So we had 5 prepayments for taxes in '21. Then at the end of the day, '21 profit was not quite on the level of the year '20. So we had to book receivables for income taxes at the end of '21. And this is the increase we do see right now as the income tax receivables increase of EUR 6.2 million. And these are the items.

You see there's a lot of ups and downs due to corona. We have an increase of tax position, the decrease in tax liabilities. We do see increase there -- a decrease there by EUR 3.1 million because we had to pay the taxes, obviously, when we got the final statements in for the years 2019 and 2020. So those needed to be paid. So that is a cash out there, decreasing liabilities and driving up the net working capital. So tax is an important item there. Other provisions will decrease. As you can see, all in all, we do see an increase from other net working capital by EUR 11.8 million.

The other increase of net working capital is the operating net working capital. Many items in inventories, trade receivables and payables and all of that is very much back to normal. Its revenue is increasing, and therefore, inventories increasing. First-time consolidation of Hertz is being added to that. But these are things that are mostly related to somewhat back to normal. And that's why we do see an increase in our net working capital there of EUR 18.3 million which to a large degree is driving the increase in capital employed.

Now how is that financed in addition to the liabilities of the operating working capital? On the right-hand side, capital invested, you can see, yes, equity is rising. We saw that already leading to the 16% equity ratio. We increased the gross financial liabilities by EUR 23.7 million. Now that's a substantial increase in our view. But if you want to relate that to some, but it's something you can look at our acquisition of treasury shares. So the share buyback of EUR 20 million is financed by this position, if you want to link that somehow. And then the additional cash we needed for the changes in our cash flow system, as I mentioned, that goes in there as well. So these are the 2 items if you want to relate that are kind of financed by the increase in gross financial liabilities.

And the nonoperating liabilities to decrease is due to the changes in the interest rates, which decreased the pension accruals as we see it in other companies, too.

So those are the changes in the main balance sheet. All in all, it's an increase in capital employed by nearly EUR 30 million, and that is kind of driven by the back-to-normal movements we do see in there. We're going to see that again.

We move over to the ROCE slide. But for a second, let's look at the cash flow situation first, cash flow in Q2. If we look at this chart from a distance, you obviously do see looking at the first set of chart there, a set of bars there, cash flow from operating business. You see that in 2020, it wasn't up. The first lockdown quarter ever, Q2 2020, lots of revenue, lots of profit. EUR 18.1 million operational cash flow.

Then if you take the next one 2021, that was the first lockdown easing after a very hard lockdown in Q1 2021. So that was driving the cash out there of EUR 24.8 million. And now if we look at the minus EUR 4.6 million, it looks like seen from distance, we are kind of getting to the back to normal of normal cash flow of a Q2 quarter. And yes, that is the case.

If we look at what was driving this up in cash flow, the difference of EUR 20.2 million that drove the cash flow from operating business up to EUR 4.6 million that was driven not by the increase in profits or any earnings there, noncash effects, as you can see in black color writing there, but it's the blue color. And that means the kind of special corona effects that were driving this. The most important one being the one at the top. We have seen the tax payments in 2021 that we needed to pay due to the results of 2020, as mentioned already. And also the tax payments for the fiscal years and the years before, those were the ones that were driving the big cash flow in last year. We didn't see that again this year, and that is why back to normal, we are up again there.

Then looking at the next ticket of EUR 6.9 million, we do see in other net working capital the increase in sales tax liabilities due to the increase in sales overall now back to normal in this quarter. That's the reason why we are getting back to normal there as well. And then the whole thing has decreased a little bit by the operating net working capital where we see changes of EUR 2.9 million. So all in all, it's a back to normal that is driving the EUR 20.2 million up to a level of minus EUR 4.6 million, up to a more normal level in cash flow from operating business.

If we look at the investment activities, you know that we had increased -- that we had the purchase of Hertz. If we look at the contribution that had, it was minus 6.2% taking out all the other effects. So that was driving pretty much the increase in investments. We do see here of EUR 5.5 million, there's a little bit ups and downs of other effects there, but all in all, it's a pretty much normal quarter in terms of investment with a little bit specialty of the Hertz acquisition.

So that's lead to free cash flow, an increase of EUR 14.7 million in free cash flow to a level of minus EUR 14.8 million, very much on a normal level as we could see walking through here. And we try to underline this normal level by highlighting that color wise on the next chart here.

This is, again, the cash flow chart, and we tried to highlight in a dark green color, what kind of the normal level means to us, and we try to make in a brighter green color, we try to colorize the special effects. So you see in cash flow from operating business, special plus in 2020, special minus in '21 and the special investment in 2019. Now if we take all that out, we are getting back to the normal level again in terms of free cash flow in the year 2022 now in Q2. And obviously, Q2 is not important free cash flow-wise. As you all know, the big cash flow is generated in Q4. And to some degree, still in Q1, when the cash in of the Christmas business is actually happening. So that is the time we are looking at cash wise.

Now I mentioned already ROCE, that we should look at ROCE. Also in ROCE, we can see this kind of back to normal development there. And you see it here on the left-hand side. Yes, the EUR 80.8 million for the last -- for the 12 months ending mid last year, they were special. That was the corona wound of Christmas 2020 in that EUR 80.8 million whereas the capital employed on an average basis is steadily rising, as you can see, there. So if you look at the ROCE that is calculated there, the corona moves it up to 20%. But now we are back to the 16% -- 15 percent-ish where we have been in the last year, which is a very stable level, which is a strong level we feel and we love to be on that level there. Obviously, we love the 20%, but we are not satisfied with the 16% we do see right now that is completely normal, that is back to normal for us. And this back normal leaves us with a very positive view on the future. And I'm sure that Christian is going to highlight that again when he is turning to the outlook.

[Christian Friege, executive]

And he does so with delight, thanking you, Olaf, for financial details that has 1 overarching mission, and that says that the solidity in financing this company is not lacking. This is still the CEWE that you have, some of you at least have covered for many years with a conservative balance sheet and a solid financing.

The slide that you've all seen many a times, and that we'd like to show every time that we look at this, is the long-term development of our company with the turn from analog to digital photofinishing with the increase -- with the addition of the commercial online print and with our outlook for the year. And as I said before, we are confirming that we expect to end up with sales or with a turnover between EUR 680 million and EUR 740 million. And we are also confirming that we will result with an EBIT between EUR 65 million and EUR 80 million. You've all detected that the last weeks and months have actually increased our positive outlook. You have actually seen that there is evidence from the past that the recession does not necessarily mean -- recession consumer spending does not necessarily mean certainly, that is the fact from the past, a decrease of sales at CEWE. And you've also seen how we are actually about to manage that and why we're thinking that.

So overall, we can confirm our targets for the year. I talked about the revenue and I talked about the EBIT and all the other numbers that you can see on the slides are derivatives from that are actually the reasons for why we believe that I shall not go through them line by line, but they are documented here and the confirmation is what you need and what you will take away from this call, I hope.

And with that, we are entering our Q&A session. So if you should have any questions, please fire away.