Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Transcript 2021-Q3

[Reiner Fageth, Member of the Board of Management]

Good morning, everybody. We hope you can hear us now from Oldenburg. Welcome to today's results presentation of the Q3 results from CEWE. Today is a way to manage this in a very cost-saving way. We are doing this purely ourselves for you, together with this team's presentation. and our colleague, Axel Weber just asked me to highlight that we are recording this presentation, but only the presentation part as long as Christian, myself, Olaf are speaking along this agenda. And after that, we'll stop recording. That is all that's going to go online afterwards. And the questions that you hopefully will be asking afterwards are not going to be online. So that's just the technical reason. Welcome to today's presentation and today's discussion. We have a mixed weather in Oldenburg, but at least for the time of the presentation, we have asked for a nice sunny sky. And so far, it looks like we get it. So this is a nice setup for our Q3 results. After a quick summary from Christian of the takeaways from the Q3, we are running through the system as always. Operational details on Christian, what happened, what happened strategically, then I will run through the financial details and the outlook from Christian will be followed by the Q&A session, again, which we do not record. And having said that, I pass on to you, Christian.

[Christian Friege, Chairman of Management Board & CEO]

Thank you very much. A very good morning to you all. Wherever you are in Europe and Germany, well, part of Europe, I welcome you to this presentation, and we would like to explain to you our Q3 and year-to-date results. On that slide, you can see an overview over the first 3 quarters. And we've explained the -- compared to 2020 here with 2021. You may remember -- certainly those of you who participated in our Q2 update call. You may remember that we had this complicated chart with 3 arrows up and 3 arrows down to get a little bit of -- shed a little bit of light into the first 2 quarters where we always have to keep in mind that Q1 2020 was no corona. And compared to a corona lockdown quarter in Q1, Q2 was very much corona in 2020 compared to a lockdown eased quarter in 2021. And Q3, we are looking at increasing easing of the lockdown with a lack of long distance traveling, and that is basically what we will come across during the next few minutes when we look into the 3Q results. Now our third quarter was basically on par with the previous year's third quarter. And overall, we have EUR 700,000 ahead in EBIT compared to 2020. Now frankly, speaking, this is not really significant because you can see that Q4 was the quarter that brought the profit for the year, as it's been always the case over the past few years. And so again, what we will be doing is working very hard, and we will explain to you how we are doing that in Q4 to make another successful Q4 happening. And on the next slide, you can see that we can basically, this is the -- on the left-hand side, you see the EBIT for the first 3 quarters, and that's the gray little part of the column and the fourth quarter for the past 6 years. And you can see that the light gray quarter is -- the light gray column is basically insignificant compared to the fourth quarter. And on the right-hand side, you can see how much the EBIT growth in Q4 compared to the previous year's EBIT. And you can see basically that in 2020, we've had a very significant growth in Q4 results compared to 2019 and in 2018 is significant compared to 2017. And for this year, if we only put an extra EUR 3.6 million on top of last year's results, we will end up with the higher end of our expectations. And if we are doing less EUR 8.4 million in EBIT compared to 2020 in the fourth quarter, we will end up at the lower end of the range. And it is now entirely up to you to lay your cards. What we can say is we are working very, very focusedly on making a successful fourth quarter happen. But, and at this point in time, there is no reason why we would not confirm our expectations for 2021. Now if we look at the third quarter, one of the things I did already mention in our photofinishing business, we realized that people have a lot of freedom than they had even the previous years -- in the previous year with the added complication for us that long-distance traveling that brings us very, very significant CEWE PHOTOBOOK in terms of number of pages, size of the CEWE PHOTOBOOK and sales per CEWE PHOTOBOOK on average. It is very easy to imagine that. If you go on a Safari in Africa or if you have an RV tour in North America or if you visit the temples in Thailand, those are events in your life, that you do want the document in a significant XXL CEWE PHOTOBOOK, photo paper with up to 130 pages and that is then a significant price tag attached to it, whereby when you now go to the seaside where you may have been a few times before, you also order CEWE PHOTOBOOK, but that's thinner and with less size in term of the format. So that's one of the challenges that we are having in photofinishing. On the flip side, our commercial online print is realizing that there is business going on again that people are ordering those products again. And we are quite -- I'm happy in looking back that we did a significant rearrangement and restructuring of our commercial online printing last year. You remember that we ceased to work on the CEWE-PRINT brand and that we've had some very significant cost savings in that area, and that actually helps us now not only to cater for the increase in revenue, but also to result in a positive EBIT delta compared to the previous quarter 3. Hardware retail, again, you remember that we did some restructuring there as well, and we have basically the same result despite the fact that there is 30% less shops open today. We have basically the same results as the previous quarter. So overall, our group turnover decreased very slightly by 2.9% in the third quarter. And the EBIT -- the group EBIT reached to minus EUR 2.1 million. There's EUR 400,000 less profitable than last quarter, this Q3 2020. But overall, and this has been, I believe, for the first time in 4 years or so, we have actually realized a profit year-to-date end of September. Now a few things that I would like to brag about. And you know that before you get to the numbers that you still desire to see, you have to go through some of the more colorful slides that also explain to you what happens in our business one that we actually were awarded the EISA Award, Best Product '21-'22 in photo service for the CEWE Photoworld mobile app. And that's what you see on the right-hand side of the slide. And if you go to the top -- corner of that slide, or if you go on the mobile phone on that little area there, there are suggestions for CEWE PHOTOBOOK topics that we -- with the permission of the owner of the photo device here are suggesting. This is the first significantly AI-driven product that we brought to the marketplace. And this app has actually been the world's best product by EISA because they feel the balance between the choices that you have as a customer and at the same time the support that you get from a combination of artificial intelligence and traditional devices in the app is actually something worthy an award. The other thing that we need to report about in the third quarter, this actually happened in September is that we have awarded the overall winner of the CEWE Photo Award 2021. This is the photographer, Manfred Voss, with me in this photo. And in the background, you can see the award-winning photo in iced lighthouse, And I can only tell you that this was very, very rewarding for me personally to meet this photographer and also to have him explain to me how he actually shot this unique photo. For us, we have a significantly improved press coverage around the world, I have to say, with our CEWE Photo Award 2021, and it is now the uncontested largest photo award worldwide with more than 600,000 photos being submitted in this award. Another thing to brag about is that we actually sold the 75th millionth CEWE PHOTOBOOK list last October. This is a few weeks ago. You can see here on the photo Lizzie Ross from Wales. She actually ordered the CEWE PHOTOBOOK at Boots. And we had a little ceremony in front of a Boots store. And with me on the photo, by the way, is also Christie Goodwin, who is one of the jurors of the CEWE Photo Award and who was there for the occasion as well. Since 2005, the CEWE PHOTOBOOK has been a best seller and is and will continue to be the backbone of our photofinishing business. Then as you would expect me to do right before Christmas, there is a little commercial break in here. We have introduced again new products such as the new advent calendar with a 100% biodegradable inner part. So you can see here sustainability coming across an expansion of the frame range, sorry, and lamination. We've upgraded the poster range significantly with new designs for every occasion and also framing options we have added a new CEWE PHOTOBOOK gift box right on time for Christmas we have actually extended the CEWE PHOTOBOOK in terms of the maximum number of pages that we can manufacture for you with more than 200 pages for the digital version and 130 pages for the photo paper version. Here, the challenge is to have the bonding strong enough so that this actually holds up during the time. We've introduced nature prints. I'm very proud of that, I have to say, which is a high-quality photos on recycled paper and we believe that our sustainability focus can be underlined by that product as well. Same paper other different products, which is the greeting cards with natural paper, again, a sustainability product. And then we have introduced throughout the range and specifically for our CEWE CALENDARS, premium designs for a lot more products, and these will actually find good amount of customers in our customership. Again, for 2021, we have in all of the CEWE country -- a lot of the CEWE countries, TV campaigns, great emotions again. You may have met the [ Bachman ] family on the picture here with their twins Lea and Tilda who featured in some of our TV spots, they are genuine customers of ours and how they are actually feeling about Christmas, this TV spots actually shows you. [Presentation]

[Christian Friege, Chairman of Management Board & CEO]

And now we have this year-round little extra TV spot for advent calendar. [Presentation]

[Christian Friege, Chairman of Management Board & CEO]

And I hope you noticed the very happy eyes of little Tilda. I can share a secret with you if you don't anybody else. This was the first time in her 2.5-year-old life that she has actually been allowed to have chocolate and it shows in her eyes, I have to say.One of the challenges of the current times is supply with material. And I do want to share with you that we have worked very, very hard over the past months and the S is since early on in 2021 to make and to ensure that we have sufficient supplies for the Christmas season. There is 1 or 2 advantages that we have. One is that we have been working with a lot of our suppliers for decades. And it is a partnership more so than a supplier and customer relationship. And in this partnership, we have in the past years from time to time, also supported companies where we felt they are worthy of a partnership support, and we are now seeing the fruits of this type of partnership. It is, by the way, a core part of our corporate culture which has a broad understanding of sustainability that goes beyond what we tend to look at in these days, which is environmental sustainability, but we also look at sustainability partnerships, sustainability, working relationships with our employees, and we see some of the fruits coming our way here. There is another aspect of sustainability in that, we have a relatively small portion of our supplies coming from faraway countries. So the news that you read about containers lacking and freight ships being short supply are news that we do read as well. And that for certain elements of our portfolio are, in fact, affecting us. But by and large, we get our supplies from nearby places, and we have worked with our suppliers. In many cases, for them to be able to distribute to us from their European plants. In some cases, they even build this up in order to service us. So what I'm trying to say is that we have put a lot of diligence into ensuring the sufficient supply of supply materials, And most recently, I believe this is a week or 2 ago, we set out a press release, and this was picked up in some media already as well that we feel we are well prepared. And the message here is when you order your CEWE -- your very personal CEWE Photo product for Christmas, then you can actually expect from us to also be able to deliver that. And there may be a little difference to folks who sell toys these days or consumer electronics who suffer from the shortages that we all read about in the newspapers. Now if we look at the numbers, you can see that the total prints are slightly below the 2020 number for the Q3. Also, the value for photos has decreased very slightly. I would want to remind you that in the previous quarter, we were at plus 6.2%. And then if you turn over the page, you can see that overall summed up between the first 3 quarters, we are actually still at plus 3.8% in the value for photo. What we also need to keep in mind is that Q4 now is not so much about traveling. Here, you can see the lag that I already mentioned of those big CEWE PHOTOBOOK orders for Safari in Africa, et cetera. Now in Q4, the focus of our customers need shift actually from the travel documentation to the very personal gift that you've seen in the TV spots just now. And so the impact that we would expect from travel-related orders should actually soften over the next few weeks. If we look at the CEWE PHOTOBOOK, again, we see a decline here the third quarter and also in the first 3 quarters. Again, if you look at the figures for this first 6 months, the decline was slightly higher than the 15.2% that you see here. And again, we are looking at the impact that I've explained before. So overall, the business segment of photofinishing is declining by 3.7% in sales and by 3.2% in -- hang on, and added up, sorry, I'm sorry. And for the year-to-date figure, it's minus 3.2%. Yes.So overall, we look at the quarterly figures that we always look at. We see, in essence, a development that we've seen for many years now. And that is a slightly increasing Q1 level of sales, a slightly decreasing level of sales in Q2, a well and significantly declining level of sales in Q3 and the backbone of the business in Q4. Those of you who've been covering us for a long time, longer than I have been in the business, in fact, they will remember that we used to have seasonal employees in Q3 in the old analog times when people needed to develop their photos in order to find out whether they were actually coming out nicely. Now in our days, the focus of the business is on Q4, whether it's gift-giving season and where the very and the most personal gift is actually coming from CEWE Group. You see the exact same design here if we look at the overall absolute numbers. If you look at the EBIT, same increasing importance of the first quarter, decreasing in importance of the second and third quarter and then both of the results coming in Q4. So far for photofinishing, if we move on to retail, I want to remind you that we did some very significant changes to our retail business over the last 12 months in that we decreased by closing stores. The number of stores that we're operating from about 140-some to now 101. That is a decrease of 30%. And during that time, we have actually -- with minus 30% in the number of stores yielded a decline in revenue of -- and I say this knowing what I was saying, of only minus 15.8%. And if you then look at the development since 2017 that we've actually depicted here on the slide for you, you will see that this is a continuous management of the hardware sales that is number one, intended for profitability. You can see that despite the fact that the revenue is almost half now since 2017, the EBIT is the same in Q3. And if we go over the page, it is also neither here nor there in the first 3 quarters. And at the same time, if you look at the CIPA numbers, that is the Camera & Imaging Products Association that is actually capturing the worldwide camera sales, the number of camera sales between 2017 and 2020 is decreasing according to CIPA by 64%. And whereas in the run up of the first 9 months, our sales are only decreasing by 37%. And this is intended to manage for profitability, for professionalism and for running a chain of stores that are believably focusing on the higher end of the market. Also in Commercial Online Print, where we are running the brands of Viaprinto with a service focus for small- and medium-sized enterprises and where we are running SAXOPRINT and Dresden with the best price promise, We are the cost leader in industrial online printing, and we have actually been quite successful over the past 9 to 15 months with running a best price promise based on best cost performance, And then we have the LASERLINE brand for covering the metropolitan area of Berlin. And you can see here that in Q3, We've managed to turn around the business from previous years, third quarter by plus 8% in sales despite the fact that we see a launch of on the one hand, there is an opening, and we can see that. On the other hand, the opening is, by far, not full. So there is not as many events happening that posters are needed for, there's hardly any fares happening and those fares that are happening are having less people. So business cards are not in the demand that we would expect them to be. And again, a lot of the business print is still coming in slowly. Despite that, we've increased our sales by 8%. I hear that the number of new customers that we are acquiring is also quite satisfactory. And overall, we've managed to improve the operating results, the EBIT result, I should say, precisely by EUR 1.4 million to basically breakeven in the third quarter. And if you look at the overall year-to-date performance by end of September, the improvement is even going beyond the EUR 1.4 million, so we are now EUR 3.9 million ahead of where we were 2020. And we are, in fact, also ahead of the previous years with the measures that we implemented, and in the word of the company. We are quite happy with what we've done because it's coming out the way that we hoped it would be. And then 2 more lines in the business segment, others, those of you who have been covering us for a longer time, know that the sales come entirely from our tireless investment which is still growing nicely by plus 20%. And you can see that, that is in line with the Q1 -- Q3 performance plus 20%. And overall, the EBIT performance is a wash. So adding all that up, we see a 2.9% decline in turnover for the group, which is less than the year-to-date decline in turnover, which you see here at minus 4.4%. And you can see that the EBIT is year-to-date September with a EUR 100,000 with a breakeven ahead of the performance of the previous 3 years. So we feel that we are well positioned to go into the fourth quarter, but we've also communicated very clearly to you what we've done every year in the previous years, Q4 is the make it or break it. And with that, I hand over to far more financial details, which Olaf has prepared for you.

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

Thank you very much, Christian. And looking to the financial details, we'll try to find some more of the details what corona actually contributed and how far corona influence the numbers that we're looking at and quite frankly, those topics are more to be seen on the balance sheet and cash flow side, not so much -- which is our first one always not so much on the P&L side. What we are looking at here right now on the P&L side. If we go through the details, you see that we have the minus EUR 3.9 million in revenue overall. And Christian already walked through that in great detail. Plus in Commercial Online Print minus and retail completely logically due to the number of stores and photofinishing continued corona easing also the slight minus we have seen there. So there is revenue development in terms of the other, just walking through the right line here, the column the next important item or more important item, not really important is other operating income, an increase by EUR 1.6 million, as you can see. And the reasons behind are plenty of them, there is a release in accruals like income invoices. So you see we're getting into the details already. We did release some accruals there. We had a sale of fixed assets as we always have typically. We had some service revenues and so on. So those things added up to a change of EUR 1.6 million in this line here, but no big operational driver behind there. If we look at the first big item line after revenue, cost of materials, what we realize here is a slight decrease by EUR 0.7 million, which is due to the fact that we are keeping on the same level of percent of revenue here and as the revenue is slightly in a downward trend, we are reducing cost of materials to the same degree, again, as we have no directionally easy way that -- cost of material business like retail or Commercial Online Print go both up or both down. They contradict each other in that direction. That's why they're balancing each other, and cost of materials stayed the same in terms of percent of revenue, 27.6%, 27.9% doesn't make a big difference. Next big ticket item is the personal line cost. And what we see there is that we have, in absolute terms, an increase by EUR 1.5 million. As you can see on the very right-hand side there, the EUR 1.5 million is very much driven by the increase in our headquarter staff here for the important strategic topics that we want to move forward, R&D, for marketing and things like that. And at the same time, it's driven by a little bit less compensation we had to short-time work allowances, which, obviously, was an item last year, not by far, not so much this year. So that leads to the fact that the costs overall are slightly increased by EUR 1.5 million here in personnel. At the same time, revenue is down. So in percent of revenue, obviously, both those changes increased the percent of revenue from 31.8% now to 33.9%, which is completely understandable given those drivers. In other operating expenses is just the opposite way. Yes. obviously, revenue is on a downward trend as we saw already, but the other operating expenses did not increase, they decreased here. As you can see, a couple of drivers on the right-hand side, not a big one but many different topics like we had the -- we have increased the expected loss allowances of debtors. Last year, we are talking corona high times last year Q3. That is now on a high level, and we don't have to increase. But again, we are on a conservative level there. It's all fine. That's why we didn't do that again, which was positive. Mailorder costs are down due to revenue development and in photofinishing. That's the way it is, but it's a positive item here. We had less currency losses, which is a purely technically driven thing, obviously. But also, we had some increases like maintenance and we are really taking care of Christmas. That is, quite frankly, adding up to like nearly EUR 0.5 million or a bit more than EUR 0.5 million. So we were really spending money to make Christmas happen here. But all in all, it remains a slight increase in other operating expenses here. And if you apply that to the decrease in turnover, that means other expenses is quite constant or goes down a little bit from 35.5% of revenue down to 34.8%, but not a big deal there. And then if we start from EBITDA and we look all the way down to EBT, we can only say, it doesn't really make a difference. The numbers are pretty much the same as they were the time before there is no change really anymore. So all in all, looking at the P&L, one can say it's a pretty eventless quarter. There's no big change in the numbers we had seen last year, obviously. If we move to the balance sheet side, and they're just the overview thing here, what do we see there? The first thing, if we look at the assets part, we see an increase by EUR 9.5 million of the balance sheet length overall to EUR 503.1 million. And this EUR 9.5 increase is purely contributed at the bottom there, you can see by the current assets. The current assets has increased by EUR 15.1 million. The noncurrent assets decreased by EUR 5.9 million, the yellow part there. And the EUR 5.9 million, no big deal. It's just the normal movements and the main driver of the decrease in EUR 5.9 million is the fixed assets which decreased, as is mentioned in the box up there, by EUR 13.9 million by purely scheduled depreciations that's the way it works, and that's the way it always was, so there is no big deal, there. We had a slight increase in deferred tax assets, and we had the financial assets where we had a fair valuation for a financial asset. We have that reported to us. We didn't increase value asset. It was reported to us by the fund that we were invested in -- that we are invested in, and it's not shown in the P&L. It's just moving into the OCI as we opted when it was applicable in this IFRS 9 change some years ago. So that's just a side topic. That is the decrease in noncurrent assets. If we look at the increase at the bottom in this greenish color in current assets, you can see that all the comments at the bottom there are in blue color, which means we do see a lot of that being corona driven by either changes of last year or changes of this year. So we have, for instance, the receivables from income tax refunds is because we obviously pay much more taxes. Now again, last year, you all recall that governments pretty much all over Europe or the world and especially in Germany, we're very willing to allow companies to withhold their tax payments for a while until they could see whether life was going on. And that's why we were very careful last year as we had reported to you, but then we release that towards the end of the year already fully. But now it means we know that we are surviving this year, it won't be no difference for sure. And that's why we are back to normal payments in terms of taxes there, and that is a big increase in receivable from tax refunds. Inventory begins -- this also partly corona-driven although retail is going down in terms of inventory, especially the on-site finishing is moving up. As Christian mentioned, we don't get much supply from not very close to us, but there is, especially on-site finishing, a bit coming from Asia. And in order to make sure that we can for sure deliver, and also on-site finishing at the Christmas period, we have stacked up our inventory there. So there is a purely operational but corona in some ways, driven thing we fully support, and we did very explicitly to make sure we deliver to our customers. And the last point is receivables from enforcements from short-term allowances, there's a slight decrease there due to less short term allowance this year, quite obviously. So all those increases add up to EUR 15.3 million more in current assets. And that is the main driver of the EUR 9.4 million balance sheet extension overall. If we look at the liability side, how this extension is financed one can see pretty easily it's financed by equity. You can see the equity increased by EUR 25.9 million here in this box on the right-hand top. Although we paid 2 dividends due to the postponement of the AGM last year, to October, I guess it was, we paid dividend in 2020 and the dividend in 2021, both in the last 12 months. But nevertheless, even though if you deduct so much of like EUR 31.1 million from having paid for revenue from the overall result, you get to an equity increase of EUR 25.9 million, which is quite substantial and clearly paying for the overall increase in the balance sheet that we just walked through. So that is on the equity side. Then there are a few changes on the liability side, we have noncurrent liabilities. No big change there. We have the lease liabilities which are completely normal due to the repayment we've done a little bit of restructuring in the retail sector. We had the increase in pension provisions just as normal time parcels by, as always, in the last years, and we had the slight decrease there in the purchase price payment to Cheerz, there's a little bit here with EUR 1.4 million, we can see in the noncurrent liabilities. The same we do see at the bottom in the box, the current liability is EUR 6.4 million. So that is the EUR 7.9 million that we did pay as last payment to Cheerz and now shares is 100% part of CEWE.That brings us to the current liabilities, also there slight increase -- decreased by EUR 8.4 million, and the main part of that decrease we walked to already in terms of the Cheerz point. But trade accounts payable is a decrease there and other short term provisions is a decrease there, which is to the utilization of the provisions which is corona-driven. And that brings us to the point of if we look at this balance sheet here, the corona effects are split on both sides of the balance sheet. That's why we can't see them very clearly here, but the thing that we can see very clearly is the increased equity ratio. I don't want to omit that. We increased from 33.2% to -- sorry, from 53.2% to 57.3% in terms of equity ratio. That shows, as always, CEWE is rock solid. Now if we move on to the balance sheet in the management balance sheet perspective, we are moving all the corona parts on the left-hand side because, in fact, they are kind of pretty much all part of, we would called it, working capital especially net working capital. And then we add it up that way, you can see that actually, we have increased the capital employed quite strongly by EUR 25 million, which is obviously not driven by the yellow part, the noncurrent assets here, which is the same decrease of EUR 5.9 million we saw on the chart before. And they're also not driven by the cash position, which is just increased by EUR 0.5 million, so a completely normal level of cash we see there, which is driven only by the increase in net working capital of EUR 30.3 million, you see at the bottom there in this greenish -- light greenish fraction of the color. And if you look at the points at the bottom, you can see that in this box, left box at the bottom they are all pretty much in blue color, except on the Cheerz point, and that means they are all related to corona kind of either a big corona effect in last year. which is not happening again this year, and that's why we've change, or has it changed this year? I don't walk through them now again, but it shows that corona has some impact here on the management balance sheet, which is quite visible and nicely summed up there in net working capital. But nevertheless, although it's quite a big change of EUR 25 million there, we have already seen that on the right-hand side in terms of capital invested, you see the increase in equity of EUR 25.9 million. And so that is counterbalancing that very nicely, corona is paid for -- any change we have seen there now is paid for by the equity side. So far, we have looked here at the last 12 months development and compared end of September throughout the year. And now if we look into the cash flow of Q3, we have to switch our mind and look into the changes that we have seen within Q3. And we are looking at that. It is actually in the end of the day, pretty eventless, because we had a plus EUR 1.2 million cash flow, operational cash flow last year. We're now a little bit up to EUR 3.7 million. And if we look at what was driving those changes operationally, we are in the black color here. We are actually on a good way. We have a slightly higher earnings. We looked at that already on the side of the P&L. And we have a little bit higher cash flows from operating network capital, mainly in those 3 quarters -- sorry, in the 3 months through the increase in trade accounts payable there. But that was counterbalanced by 2 corona points. The first point is strongly counterbalance and not quite rebalanced again to the last point. More tax payments needed to be done. We talked to that already. We saw the asset in the balance sheet already that we had those claims there so far booked for which is due to these tax payments. And you see, yes, we are paying taxes this year as we always did a very normal way. And that is a change compared to corona year last year 2020. Now that is counterbalanced a little bit, the minus 8.4% through the plus 4.7% at the very bottom here to other net working capital, But in the end of the day, it is a negative point that is, for corona is decreasing, the operational increase in operating business cash flow is decreasing that to a level of EUR 3.7 million. All fine, all working into the right direction. In terms of investment in the middle part, yes, slightly higher investments to higher operational investments, looking at things, looking at Christmas, higher investment in some companies where we had some loans. So that is no big deal. It's a very normal. It's just happening this year and this quarter, no big change compared to last year. And it's a very normal quarter 3 number, adding up to a cash flow of minus EUR 11.5 million. But again, very normal, very seasonal driven development that's the way it is. That was the cash flow of Q3. If we just very much -- very briefly glanced at the cash flow of Q1 through Q3, we don't have to work throughout out the details. But what you see there, this was very, very, very much driven by the big changes we have had around Christmas due to corona. You remember, we had a very high, more than EUR 100 million cash flow coming in, in 2020 due to corona. And we had very many payments happening to our customers, to our suppliers -- sorry, to our retail partners, to our suppliers during January already, so counterbalancing that. And these payments happening in Q1 in January this year obviously are visible in this Q1 through 3 cash flow, and that's why they are distributing the view there. Now that is obviously topics that depending on how corona happens around Christmas will happen again. And then we have a very positive one in Q4 or it won't happen again. We will see what happens there. If we look to our last view on the ROCE side, we have a nice increase there driven by the last 12 months in terms of EBIT, And if you apply that to the average capital employed over the last years, we are already close to 20%. If we deduct the corona topics from the EUR 405.3 million capital employed, then we can easily say that other -- anything else kept constant, we would even be north of 20% again. So whatever the number is, it's a high number, and we feel in a strong position with the ROCE that we can show you here. And what all this means for our view on the future and Q4, Christian is going to use a few words on.

[Christian Friege, Chairman of Management Board & CEO]

Absolutely. Thank you very much, Olaf. This is one of our favorite slides that's coming up right now, which shows the 31-now year perspective of the CEWE Group from our analog photofinishing times where we were already a European market leader to the digital photofinishing times where we have recaptured that spot, and where you can see that this is a strong story of long-term growth. We have estimated for this current year a level of -- turnover of revenues of EUR 710 million to EUR 770 million. And as I explained before, we have no reason to not confirm this. So we are confirming this as we do the EBIT development, as we do the group targets, I've actually elaborated on this slide earlier on. Again, you can see here that we are slightly ahead of Q1, 2, 3 2020 with our EUR 700,000 in EBIT. And you can see on the next slide, as I have explained to you before, that in order to achieve the profitability targets, we've got to add EUR 3.6 million to the profitability or even can decline by EUR 8.4 million and still would be within the range. And so what we can share today with you is that we are confirming our group targets for 2021 with the caveat that have also made that all the profitability of the whole year comes out of Q4. And clearly, one of the questions that a journalist is going to ask me this afternoon. And he was kind enough to send me the questions beforehand is, how do you feel about a company where you only know by Christmas, 6 or 7 days before the year-end, how the year is. And I can tell you, it is a bit like a thriller every year. And truly speaking, the level of business that we are having is so significant that we can only do the very best we can in order to prepare for Christmas. And this is, I can confirm that to you what we've done this year again. As a marketing and sales person, I'm very much convinced that the marketing and sales campaigns that we have out there are actually campaigns that will do the very best possible also compared to previous years as a production man that I'm also on the sideline. I can tell you that we are best possible prepared in our production lines, in our supply lines, as we've explained to you, but we never know what's happening. So on the light on the back of that, there is no reason why we would not confirm. In fact, we are confirming. And with that, I am opening the Q&A session.