Cewe Stiftung & Co KGaA

XETRA:CWC

Earnings Call Analysis

CEWE Group Reports Strong Growth in Q3 Earnings Call

In Q3 2024, CEWE Group achieved a turnover of EUR 164.4 million, marking a 4.2% increase. Year-to-date, revenue rose to EUR 481.6 million, a 6.3% increase, positioning the company to reach an annual target of EUR 820 million. EBIT for the nine months stood at EUR 5.5 million, more than doubling from last year, with a goal of up to EUR 87 million by year-end. Despite macroeconomic challenges, CEWE remains optimistic, preparing for Christmas season sales with significant investments and a firm market position in personalized photo products, particularly the CEWE Photobook.

A Strong Start to Q3 2024

The CEWE Group reported a solid performance in Q3 2024, with group turnover rising by EUR 28.4 million, reaching EUR 481.6 million, marking a 6.3% increase compared to the previous year. This growth is notable as it surpasses the group’s targeted growth of 5% for the year, aiming for a total turnover of EUR 820 million. Without factoring in a business model shift with a trade partner, the growth stands at a still impressive 4.4%.

EBIT Performance

Earnings Before Interest and Taxes (EBIT) also showed significant improvement, increasing by EUR 3.2 million to reach EUR 5.5 million. This is more than double the previous figures and aligns with the continuing profitability of the group despite external challenges. The target for EBIT remains set at EUR 87 million for 2024, with Q4 playing a critical role in achieving this.

Seasonal Trends and Expectations

Typically, Q3 is a softer quarter compared to Q1 and Q4. The company recorded a turnover of EUR 164.4 million in Q3, reflecting a 4.2% increase. Despite cost pressures from heightened marketing investments and rising materials costs, CEWE managed to achieve breakeven EBIT in this quarter, showcasing the resilience of its operations.

Segment Performance Insights

The Photofinishing segment remains the cornerstone of CEWE's operations, generating a turnover of EUR 396.3 million, up by 8.5%, bolstered by a 1.7% increase in volume and significant premiumization efforts. The popular CEWE Photobook saw turnover increase by 5%, despite a slight reduction in volume. The company’s diversification in product offerings aims to cater to various consumer segments, enhancing overall profitability.

Commercial Online Print and Retail Challenges

The commercial online print segment witnessed a slight turnover reduction of 3%, attributed to macroeconomic pressures. Unlike previous years, EBIT here improved modestly to EUR 2 million, demonstrating robust cost management. Conversely, the retail business faced challenges with a 3.4% decline in turnover, underscoring the need for strategic shifts, particularly in hardware-driven sales.

Investment and Strategic Outlook

Investment plans remain ambitious, with EUR 65 million earmarked for capex, though actual spending is projected to amount to around EUR 60 million as operational demands take precedence. The management expressed confidence in meeting the year's targets and emphasized a commitment to long-term growth opportunities across the segments. The outlook for Q4 is particularly optimistic, as previous seasonality trends suggest it could lead to record earnings.

Navigating External Challenges

Despite a challenging macroeconomic environment, CEWE has adopted several strategies to mitigate risks, focusing on customer satisfaction and innovation. Their initiatives, such as premium products and exceptional customer service, are expected to drive engagement and sales, positioning the company well for successful holiday season sales.

Conclusion: A Promising Future

In summary, CEWE Group's performance thus far in 2024 sets a solid foundation for the final quarter. With growing revenue streams, strategic investments, and a focus on customer-centric innovations, the group is well-positioned to not only meet but potentially exceed its financial targets for the year.

Earnings Call Transcript 2024-Q3

[Operator]

Good morning, ladies and gentlemen, and I warmly welcome you to today's Earnings Call of CEWE Group following the publication of the Q3 figures of 2024.

Kindly note that you have the opportunity to switching on your camera yourself, so -- but please bear in mind that in this case, you will be visible during the entire presentation but not on the recording. The recording will be stopped to the Q&A session.

So I'm delighted to welcome CEO, Yvonne Rostock; CFO, Dr. Olaf Holzkamper; as well as Vice President, Investor Relations, Axel Weber. So the Management Board will speak shortly and guide us through the presentation and the results. After the presentation, you have the opportunity to ask your questions.

So with this, Dr. Holzkamper, I hand over to you.

[Olaf Holzkamper, executive]

Thank you very much, Mrs. Moluk. Thank you very much for the introduction, and welcome to today's Q3 2024 conference call.

Here we are after Q3 2024, and we are younger than ever and stronger than ever. That's what we realized as we look at the numbers of this first 9 months. And we are going to lead through this as always. If we're looking at the agenda of the day, Yvonne Rostock is in short time going to run through the results in a nutshell. Afterwards, she's going to walk through the different business segments and summing up in the group results at the end.

I'm going to add a few details on balance sheet and cash flow as well as P&L. And then we are, as mentioned already at the beginning, open to take your questions.

So having said that, stronger than ever, Yvonne, here we go.

[Yvonne Rostock, executive]

Thank you very much. And warm welcome as well from my side to the quarter 3 call. Most of you, we met during the second quarter call when we shared great results of the half year 1. Now 1 quarter later, I'm more than happy to see you and to share firsthand the landing.

Let's get started with CEWE Group results in a nutshell. Good news, the CEWE Group continues the year with a strong advance versus last year. If we start from the left, on the group turnover, it raised by EUR 28.4 million, up to EUR 481.6 million, and this is an increase of 6.3%. To put this in perspective, in '24, we target a growth of 5% to reach the upper end of the target range, EUR 820 million.

To give full transparency, if we exclude the shift in business model for a trade partner, the growth would land at 4.4% plus. If we look at the EBIT, the EBIT increased by EUR 3.2 million, up to EUR 5.5 million, and this is more than 2x. To put this in perspective, to reach the upper end of our target range, we need to grow by 4%. To sum up, top and bottom line developed successfully. We had a strong advance, and we clearly confirm our targets for 2024.

If we look one slide further, what did Q3 contribute? The group turnover raised by EUR 6.6 million, up to EUR 164.4 million, and this is an increase of 4.2%. The group EBIT achieved a breakeven, despite challenging macroeconomic environment, despite cost increases and despite stronger invests in marketing by EUR 1.5 million.

To put this in perspective, let's have a look into the quarterly distribution. Here, you find the quarterly distribution of the EBIT. Let's remember, Q3 and Q2 are traditionally weaker than Q1 and Q4. And looking at the data, you see this as well in 2024, just with a different distribution. So the data between the 2 quarters, 2 and 3, nearly net out each other and we take along EBIT more than the advance of the Q1. Year-to-date, this gives us an earning lead and EUR 5.5 million.

Looking at the year-to-date development across multiple years. If we start on the left-hand side, this is an important picture. You find that the EBIT of EUR 5.5 million for the estimated 2024, the gray part of the slide. This is a record since 2017 and even longer since our digital transformation 2010.

Yes, the year will be decided in Q4, but we have a unique starting point. Transferring this into the yearly projection on the right-hand side. That means for us, with the Q4 matching last year's performance, we would reach the upper end of the target range in EBIT. Watching the history, we even managed a growth in Q4. This makes us confident, even if it won't be a walk in the park, but we are well prepared for the Q4.

So let's dive into the business developments and as well cover the Photofinishing. If we start, you know the story of CEWE and the ones who accompanied us for a long time, CEWE everything starts with the consumer. And that includes not only our loyal CEWE consumer, like here, one of our families, it also includes B2B commercial online print that trust SAXOPRINT and Viaprinto, and it includes consumer that visit our retail stores across Europe. When we are able to present good numbers, we succeeded in making more consumer happy.

Making our consumer happy, it's easier said than done. They expect the best and they want to be inspired. And that is exactly what we are focusing on every day. So you see our orientation, our mission, inspiring people to create personalized photo and print products at the highest quality.

And how do we achieve this? By excellent products, by an outstanding experienced along the entire the customer journey, and here, innovations are key to stay ahead of the competition and to confirm our market leadership.

Q4, we have set at the beginning of the year as well a set of principles. Principles, we summed up that made us strong in the past and some of them, even we do so more in the future. All starts with the consumer at the center. And here is one important KPI we follow closely, which is the Net Promoter Score, and I can confirm that the Net Promoter Score again increased by 0.8 points and now reaching 62.8%.

Let me, next to this one, stress 3 principles a little bit more in detail following on this chart. So we have a principle with strong brands, which means we invest in our brands, especially during Christmas, you see the campaigns out. You might have seen already the advent calendar and of course, the CEWE Photobook. Our CEWE Photo Award, the CPA so-called CPA, has started very promising. We have nearly 260,000 already hand-ins, which is 180% more than in the previous competition. And with this, we hold the largest photo competition worldwide, expecting more than 0.5 million sendings. And this is important as well as for the brands because it sets the base, it sets the photo culture, which is a base as well for our business.

The second principle is sustainability. We have talked about sustainability. We have an ambition to improve this sustainability year-by-year. We shared the progress. We have published the 14 sustainability report. We are nominated again as a sustainability leader this year, and we have met some KPIs like most of our paper, nearly 100% is FSC certified. We cut our CO2 emission more than half since 2015.

Right now, I have to admit, our teams are fully occupied meeting EU regulation, so-called CSRD. And if I say fully occupied, I mean fully. We estimate 1,000 working days and a 6-digit figure of cost. So we are looking forward, having this safe and [ try ], being able to focus how to improve our sustainability and returning back to our main targets centered around people, environment and society we live in.

The third principle I would like to comment here, it's the outer circle, it's the team sharing the same values. Here, I'm happy to share that we concluded our new cultural mindset, which is a development and the strengthening and aspiration, which will carry us for the next 10 years into the future. It is the so-called [indiscernible] CEWE, which we are now rolling out and more about this in the next year Frankfurt.

Let me go deeper into 2 remaining principles: efficiency and innovation. Efficiency let's start with this one, it's an everyday effort to be faster, better and more reliable. We continuously invest into printing methods and machinery, into fast delivery. You might remember the so-called LoadRunner [indiscernible] sorter, which we have introduced, which we had launched for the last Christmas season and which this Christmas season will reach full capacity.

As well, we are investing in efficient site extensions. After Poland, which we had shared in quarter 2, we are now happy that we can present that we have as well extended Freiburg successfully, ensuring the future growth.

And Freiburg is strategically positioned. In Germany, it's the so-called [Foreign Language]. In English, I would say, it's the triangle, Germany, France and Switzerland, and this is an important strategic point for us. Here are some impressions of the opening, which was done in September. And we concluded the project in time and in budget.

Let's go to innovation, not the last, but the most important one, and it's the key to our success. Last quarter, we announced that we worked behind the curtains to ensure innovations will hit the road before Christmas. Now our innovation road map is concluded, and it's a strong one. I'm happy to share a couple of examples with you.

What you see here is that the CEWE Photobook continues to premiumize. Consumers can upgrade their CEWE Photobook now with a panoramic page. It's impressive, even more impressive when you see it in live. So please feel free to test. And we are first mover with this.

And the story is great because it is proposed by a production need of a French site shared on the last year's innovation days, prototyping and then brought into production and having now been punctual for Christmas as seen the light of the life. An example of how we live innovation as a team effort and making things feasible.

There are more additions in this category like the memento, photo pocket. If you have, for instance, very special entry tickets or flight tickets you would like to keep as well together with your photobook, and there are some accessories and packaging we are develop -- we develop further.

The second biggest category are the calendars, the wall calendar. And here, we propose a new approach. It's a so-called design calendar, Fineline. It's a unique product, which is developed together with product designers where you buy, in fact, the holder and then you refill the calendar year by year. It's for consumers who want to distinguish from very, very good, but the usual spiral, the same.

And as well on the calendar category, there are some further developments to keep the calendar category animated, hence and makes us possible, or makes -- enables us that we can talk about some new additions.

To inspire our consumer, what else can be personalized. We continue to look across categories and all categories, listening to consumers and offering personal ideas. You see here a couple of them like photo gifts, photo prints, especially for attracting the younger consumer, and design products. The role of the special items won't be the million of sales, but to contribute to our core sales.

Talking about core -- talking about core, the product which the consumer holds in their hand is one decisive element. But as important is the way they get there. So the user experience and the software. Here, I'm happy to announce that the new editor for mobile devices, so-called NPS, has gone live this week, and it's a unique concept for design with new smart layouts, with an optimized automatic book creation and a lot of integrated help and it works upright and as well horizontal.

So this is -- we expect that this will bring us further. We have as well listened to our consumer. And the first thing you need, if you want to do a personalized photo product is, in fact, the photo. So everyone who has tried herself or himself will know what I'm talking about. And there is a huge wish for the consumer to transfer photos from the smartphone to wherever they want to create the photo product. And here, we have developed a QR code system to do so very easily. Check it out yourself.

If we start on consumer and listening and enablement as well, we step forward on several elements, let me name 3 here. There is piloting on chat bot assistance for creating your book. We are as well continue on product presentation. It's important if you see a product that -- if you create a product that you can imagine how it will look like after you get it sent home. And so it's a 3D and very practical. It's important as well to integrate all the payment methods the consumer wants. So here we advanced as well.

There are more interesting things to talk about, but let's pause here and let's return to the strategy. We have said beginning of this year, 8 strategic priorities for Photofinishing, starting with the development of the strong brands and loved brands, making loved brands, continuing innovation, we just talked about. And we have tried international growth with a focus on Europe. That has a strong base, Western Europe continuing its success story, Eastern Europe building opportunity in Southern Europe.

We developed our B2C and B2B business across all brands, and this is very important for CEWE. And this comes -- leads us to the fifth priority, omnichannel. Omnichannel, thinking consumer-centric, connecting the dots and connecting the journeys between the different ordering clients and between the different worlds. So that means wherever, whenever the consumer wants to create a product, they will find an omnichannel way and access, easy access to do so.

In retail, we developed more and more our Photofinishing store and experience and education kind of flagship picture store concept. And in operations, our heart, still we produce 99% of the products ourselves. So it's important to make sure we do this in an efficient and in a high-quality way.

Alongside these priorities, our business plans are built and with this, we target to extend our #1 position in Photofinishing. Our results confirm this approach. So let's talk about the numbers.

Starting with Photofinishing. We had a strong year-to-date result. Photofinishing turnover rose by 8.5%, and this is constituted out of 1.7% increase in volume, 4.5% increase through premiumization and price and 2.3% due to the shift of a business model, which is EBIT neutral.

So we rose to EUR 396.3 million. We achieved this despite some macroeconomic challenges, I would say. And that means we managed to mitigate and to stay independent from them. Even we are doing well, we cannot rest on it. We continuously create value for the consumer, the product range, on the customer journey.

We invest in innovations; we invest in marketing. And in marketing, we invest in 2 ways. We invest in fact, in the business growth, the existing and the conversion. But as well, we invest into the brand on -- especially on markets where we see a strong potential. So this will pay off later.

We expand still our network, our photo kiosks. And with this, we estimate the extended market position. And we need this growth in order to mitigate the cost increase. If you look at Q3. Q3 contributed positively and strongly in turnover, it was plus 5.8%. And here again, this consists out of 0.6% volume, 2.6 points premiumization and pricing and 2.6% of the -- shift of the customers. Without this customer shift, the growth would be 3.2% to be fully transparent.

With an EBIT of EUR 0.4 million. We closed to the level of the previous years, despite challenging macroeconomics, cost increases and the marketing. So they're EUR 0.7 million last year, EUR 0.4 million this year. It's on the season, it's the right match.

Looking at distribution after turnover. Over the quarters, we can see that we benefit from our strong Q1 and Q2, and we continue to outperform our target range as well in Q3. So we can tick all the boxes on this increase.

If we look on the EBIT here, you see green as well. The same is true, above target for Q1, above target for Q2, with lower loss than targeted and on target in Q3. All in all, we can say it is a good achievement and a good position to be in and during Q4, which at the end, will decide our lending.

Diving one level deeper, how is turnover constituted. You see the total number of prints increasing by 1.7%. The value per photo increasing by 6.8%. It includes premiumization and as well price increases. And this leads to the 8.5% of photofinishing turnover increase. So the KPIs are positive and coherent across volume sales on all KPIs, we are as well continuing to be above corona level. Q3 following the typical seasonal development, less strong, but growing and contributing to the total year.

Let's come to this. Our most important product, CEWE Photobook. And we know that it is numbers, but at the end, it's families who will receive it. So it's an important number. The volume of the CEWE Photobooks developed within the corridor, which we said minus 2 to plus 2, is minus 0.9 in Q3. And if we see this as a slight reduction in Q3, but our efforts into premiumization and valorization show fruits. If we look, the Photobooks contain more pages and more photos. And I can confirm as well that in turnover, we could increase by plus 5% in Q3 and plus 8% in year-to-date.

And with this, we would conclude on the Photofinishing, and we are happy to transfer into commercial online print. You are aware of our brands, main print, SAXOPRINT followed by viaprinto, who are constituting to this turnover. As well if you followed us every year of the strategic priorities, we pursue our best price strategy. We expand our product portfolio with large format printing, which has, I would say, diversification, but as well, higher-margin proposition. And of course, we continue to potentialize synergies between commercial online print and the Photofinishing.

In the first 9 months of 2024, commercial online print generated a slightly reduced turnover, landing at EUR 64.2 million, which is a minus 3%. It's similar in decline as Q2 and better than Q1. Let me put this in perspective. We do not have the official market data, but we estimate the market declines and it's more impacted by macroeconomics. Still, it's a huge significant market with potential to win market shares, which due to our estimation, we clearly did.

Important that within this decline of turnover, commercial online print managed to improve the EBIT by EUR 0.5 million to EUR 2 million, and this is on the base of the continuous optimized cost structure.

This successful development in commercial online print can show that we have established a strong position with cost efficiency and production, and the best price guarantee performs for our consumer.

Looking in Q3, the market seems particularly weak and competitive. This required as well particular competitive measurements. So we landed with a minus 3% in Q3 with an EBIT of EUR 0.2 million behind last year, but we are profitable. Looking forward, it is not going to be a walk in the park, but we are ready to fight. And we see clearly the extra value of our commercial online print business in our portfolio.

Let's come to retail business. In retail business, we are covering, or we are combining the hardware, which is cameras, lenses, photo accessories. We are counting 101 stores across Scandinavia and Central Eastern Europe. And we are working on it to turn the stores from hardware into more and more Photofinishing stores when we talk about the strategy, and that means in these numbers, you see the hardware business and Photofinishing turnover to stores and achieve. They are built into the Photofinishing results.

Let's look into the results. On the retail, we have on the top line, following as well as the hardware business itself and minus EUR 3.4 million, which is a reduction of 3.4%, achieving EUR 21 million. In the first 9 months, and we are on plan, on target with this landing, and we see as well that we can improve slightly our profitability, challenging ourselves here quarter-by-quarter.

If we look into the Q3. We can see a minus 1.9%, so a slightly lower loss. It's going into the right direction as well here, the Q4 is going to be decisive. And we see that the EBIT could increase on plus 11%, holding the line throughout the different periods.

And this is already it for retail, and we can move forward to other business segments. And the other business segments, following the divestment of futalis in December '23, there will be no longer any turnover in this segment. Futalis is excluded since 2023.

The business segment, others is now purely carrying corporate costs and the results from the real estate property. It has contributed with minus EUR 1.1 million. It's below last year. Of course, since the takeover of Eastprint, which was under the same premise, the rental income reduced, and we had to write down EUR 0.2 million due to an insolvency of a leaseholder.

In the same picture, same explanations would be given for Q3. So here, you have a 0 in turnover and a minus EUR 0.4 million in EBIT.

This brings me to group results in one nutshell, summing up and you find back the numbers from the start to a plus of 6.3% of the CEWE Group, which marks a new turnover high for the first 9 months. And let me, at this stage, thank the whole CEWE team wholeheartedly with their commitment and their passion every day, delivering these results.

Looking at the next one, into Q3. This is the contribution we have explained in detail. And we will find back the 4.2% and, in a nutshell, the contribution of the different divisions. And looking on to the EBIT as well, as you could see for CEWE starts Christmas with a plus EUR 3.1 million earnings lead after 9 months, a good position to be in starting the Q4.

And with this, I'm happy to hand over to Olaf.

[Olaf Holzkamper, executive]

All right. Thank you very much, Yvonne. And let me add some more light on the financial details here. As always, we are starting with the income statement. First, where we've seen most of the details yet. So revenues, no need to comment. Strong growth in Photofinishing overcompensate the reduction in commercial online print, and what we are aiming at the reduction in retail. So all that is in line with the expectations.

In cost of materials, that is a role we keep talking about because we have this change in sales structure since many, many years already. And there has been the reason quite frequently, why the cost of materials actually went down, not only in terms of percent of revenue, even though as revenue is rising as well, but it went down also in absolute numbers this time again.

As you can see, it's EUR 0.9 million less material costs, which is due to the fact that we are having more of Photofinishing revenue, i.e., we have more of a value generation ourselves, which means less cost of materials, but more personal costs, more other costs, and that is what you can see here.

The share of percent of -- the share of revenue that we are deriving from retail and from commercial online print has been reduced, and that is driving this change here. Again, it is a movement, the development we have been observing since many years already.

Moving to the 2 rows after the gross profit, the personnel expenses and other operating expenses, for that reason that we just looked at, immaterial. These 2 rows show more cost because we have more of a value generation, in particular, in Photofinishing and that means we have higher personnel costs in terms of absolute numbers, EUR 3.8 million, as you can see. But also in terms of percent of revenue moving up a little bit, even though the revenue is rising from 32.4% to 33.4%.

And the same is true in terms of other operating expenses. Here, we see an increase by EUR 5 million, lifting the percent of revenue number from 35.3% to 37%. And that is obviously due to the effects we just walked through. But here, in particular, you are seeing this change in the one retail partner who has been shifted over from a traditional sales system to a commission-based system. So we have more of a revenue, and that is something that Yvonne explained already, walking through the revenue in Photofinishing. We have more of a revenue.

And to the same degree, so it's a completely nonevent in the P&L. To the same amount, we have an increase in our other operating expenses, and that is the reason why you see the more substantial increase here by EUR 5 million. And in addition, we have somewhat more invested a bit more already in marketing, looking into Q4 and investing into our advertising and into our brand awareness.

Moving over to the balance sheet. On the typical higher-level numbers here, you can see the increase of the balance sheet by EUR 15.2 million. Now that makes sense. That is a nice increase by 5%, given that the revenue has increased roughly to that amount in terms of percent as well. Makes sense, that's where it should be.

And if you look at the liabilities side, then you can realize that the equity ratio did rise again from 63.8% to 65.8%. Now we are happy to have such a strong balance sheet here. And as mentioned always, this is not a value in itself. It is of a value, obviously, but if things get tough, but we want to leverage this sometime in the future to build something on it. So this balance sheet provides us with strategic freedom, and we will make use of it.

So that's on the normal balance sheet. Then you know that we are doing this shift over to the management balance sheet to look at the capital employed and invested capital.

Now what you see there is that the increase here is EUR 15.5 million as well, which makes sense given that the that the revenue had been increasing accordingly. So we see a completely normal development here. And if you look at the capital employed and see where it came from, then you can see, okay, the increase actually. You can read it, it was driven from the noncurrent assets. And the EUR 15.2 million, we see in there pretty much matches the overall increase in capital employed.

If we look at where it's from, yes, it's mainly the operating noncurrent assets, which is the investments into our production sites and Photofinishing in [ Koszalin ], Poland, which we had, especially last year and end of last year and this year in the first 3 months. It was, in particular, in SkyBook. Our expansion that Yvonne just explained to you and showed you a couple of pictures of the reopening of the new building, of the reopening of the site, if you want. And we have expanded and in Oldenburg, we had some renovations to do there. So that is the main investments you see there.

Underneath, we have 2 quite important changes as well, which are the net working capital and the cash. But if you read it on a sort of high level, you can see, yes, we have reduced the net working capital. And yes, this shows up exactly to that amount in terms of cash in there. So that is a change in the different positions on the side of the capital employed.

Moving over to the capital invested. What we are seeing there is the increase in equity, which we had seen before. And yes, obviously, it's driven by the profitability that we have had over the last 12 months, but that was reduced a little bit by reducing the gross financial liabilities. So there is not that many financial leverage is left. In fact, what we have in there is partly anything left to banks. It's more different financial liabilities in terms of -- in terms of rental positions that we have to go in there. Otherwise, there's no important thing to mention on the capital invested.

That was all on the management balance sheet. And looking into the cash flow. So now we are not looking back 12 months, but only in this case here, we're looking back the last 4 or 3 months. What we can see there is -- there is a slight decrease in cash flow from operating business. And so, again, there's one item to look at. And actually, it's only the same, the Q1 through Q3 number as well. So I can explain it once in here now.

You see a decrease of EUR 2.8 million at the top of this box on the left-hand side. And if you look underneath the second part, last point at the bottom, you see pretty much exactly that EUR 2.6 million in this case was a higher tax payment. And actually, it was not a higher tax payments in that sense. It was just higher than last year because last year and now, believe it or not, last year, we had the last corona effect. And we are, honestly, we are comparing us to a corona effect of last year, and I hope this is now the last time we are mentioning corona.

You know that we like to go through the time there. You know that we had a nice 2020, when the corona pandemic started and we had the profit and the tax authority said, wow, if you're generating so much profit, please pay higher tax prepayments. So we had higher prepayments in '21, and we had higher prepayments in '22. And then 23, tax authorities realized, well that profit of 2020, maybe it's not forever. Maybe it's special thing. So why don't you stop having this high [indiscernible], and we pay back a little bit to you.

So we had a refund in 2023. And this refund is now our bar we are comparing us against in '24. And that is why we have somewhat higher tax payments in '24 because we had the refund in '23. I hope that was understandable and this is what was driving down -- decrease in operating business. If you look at all the other positions, I mean, they are wash, but quite frankly. Yes, we had, in this sense, less of cash earnings. At the top, you can see this. But we had counterworking positions in operating net working capital and in the 2 other items we are mentioning there. And all that actually washes to 0. And at the end of the day, it's the tax thing that is driving the decrease.

And the same is true if we are looking at Q1 through Q3. Here, it's even more important. You see the -- if you just start at the second from the bottom, EUR 9.5 million higher tax payments due to the things I just explained, and that is driving -- can't be counterbalanced by all the other positions, and that is driving the minus EUR 5.8 million in terms of an operating cash flow business.

Now that was the operating cash flow. If we're looking at the investments, yes, they have been a little bit higher due to the things I just explained, investments in SkyBook, in Koszalin, in Oldenburg as well. And that's the reason why cash flow overall wise, we are a little below last year, but given where we are, given the time of the year, that is all completely normal and where we are supposed to be right now.

And there's one announcement, I think I should make at this point. Yes, I get a thumbs up from Axel. There's one announcement I should make at this point because many of you, analysts and of the investors, approached us in the last year a couple of times and said, it's nice that you are planning for such high investments every year. But by far most of the years, for some reason, you don't actually reach all this, reach this investment level that you planned for.

And the reason you're always giving us is because at the end of the day -- at the end of the year, you don't get it all done, all the things that you wanted to do and you stop doing the big investments in production because you don't want to jeopardize the Christmas season, and that makes sense.

But [ DSCV ], that is your words. If you know this, please tell us that you are not using -- that you will not be using the full investment because then we can include that in our mathematics. And where we are right now, you know if you look in the forecast, in the targets of this year that we have accounted for an investment of around EUR 65 million, and we have talked to our guys who are doing the investments and they are saying, it will be a roughly EUR 60 million, probably. So it will be, as in all the years before, we don't use it up completely. And this is the moment in time where we can tell you, so don't calculate for EUR 65 million, as you might have done, but it looks more like a EUR 60 million, where we're going to end up.

That was an additional comment on the balance -- sorry, on the cash flow looking forward. And last point on the ROCE. Nothing new, up again, even higher than before, so 18.8% ROCE is a number where CEWE is clearly generating value.

And having said that, back to you, Yvonne.

[Yvonne Rostock, executive]

Thank you very much, Olaf.

So it's my pleasure to sum up. With the results of the first 9 months, we confirm our yearly target 2024, up to EUR 820 million. The range that we have been talking about throughout 2024 reflected quite a bit of uncertainty around inflation, consumer and climate index and as well macroeconomic issues.

So far, we have no reasons to believe that these factors cannot be mitigated. It's worth, but we are confident. And we are clearly focusing on the upper end of the target range. This would then as well continue CEWE's long-term growth path.

Looking at the EBIT, let me come back to where we started today. We are entering Q4 with the best advance since our digital transformation and an equal Q4 versus last year would carry us to the upper end of our target range. And this makes us confident as well. We can confirm the EBIT target for this year. We want to generate up to EUR 87 million.

And this is a chart normally, we don't go through in detail. Today, Olaf just explained the investments. So out of the EUR 65 million planned investments, we are planning to land around EUR 60 million. So yes, we continue to invest into our business, and we have shown a couple of examples, where we invested today.

So we are now in full Christmas mode. So wherever we have lighted already the first Christmas tree in our offices in mid of August. And now if you go down into the production, everything is Christmas. We are prepared in terms of innovation you have seen, in terms of all the investments and all the preparation and most important is our team. So we have all the Christmas helpers, the seasonal workers with us to attack.

To sum up, if there is one thing that you should take from this call, I would say, it is -- when the outside world seems crazy, and this is right now, I think all of you would agree, it seems to be the case. People are focusing inwards. They focus on family, on those they hold most dear, and our products allow them to express their love in the most personal way.

In other words, I would say, we are confident that this Christmas will not only be a very special one for the family across Europe. It will be also a good year for the CEWE Group. Thank you very much.