CEWE Stiftung & Co. KGaA (CWC) Earnings Call Transcript & Summary

Everyone found a seat, so let's get started. It's my great pleasure to welcome you here today on the annual press and analyst conference of CEWE. We are here together, and I start from the left with Dr. Reiner Fageth, CTO; Mr. Olaf Holzkamper, CFO; Axel Weber is known as our Investor Relation; and Christian Wilbers, Communications. My name is Yvonne Rostock and I'm the new CEO for CEWE since 1st of March. So I'm 30 days in position, and it's my first public representation of the company. So I'm as excited as you might be. But let me introduce myself briefly on this occasion that we know each other a bit better. I have to stand here a bit because we have -- very welcome as well, the ones who are connected via digital so that they can see me well. So myself, I come with nearly 25 years of professional experience. I have 2 passions. One of the passions is brands, brand development in portfolio management in the lifestyle and consumer market. This all, I'm used to work omnichannel. So I have experience as well leading on retail, leading on e-commerce, as well as a close partnership with retail partners as a real omnichannel approach. I am very much passionate as well about driving innovations. The beauty market is a market with high speed and high pressure on innovations, who's first. And if I look this, it's innovation and digitalization, which goes through my career so far. I worked for 3 big companies, which is Henkel, L'Oreal and Coty since 2006 in leading positions, in general management positions and here I had a chance to lead different businesses in different life stages. So from start-up file like I opened a division in Ukraine to leading big ships, but as well having done turnaround as for Body Shop and transformation. On an international approach, I lived in different countries, Ukraine, France and U.K. And all this, I look forward to bring along to CEWE and to continue to write the success story with the team together. So far to my person, so let's get started because I think you're all looking forward to understand the results, and I have the great pleasure to present you a great CEWE year.

And we are also celebrating today, quite an important day for the share of CEWE. Because the share of CEWE, since I think a week ago, is 30 years stock-listed on the Frankfurt Stock exchange. So the 30th birthday of the share of CEWE. Additionally it's also the 30th birthday of Yvonne. And that's why, Yvonne, happy birthday to you and quality year.

Thank very much.

Thank you very much for being here and doing this on your birthday. Thanks, Yvonne.

So we celebrate together. Thank you very much. It's 30 years and now this evening, 21 years of additional experience. So let's call it this way. Okay. Let's get started for the figures. This is what we came for. If we look at the total figure, it's -- I can say, first of all, it's a great year, and it's the second best in the history of CEWE. What you can see, the turnover managed to increase by EUR 48 million. And this is a plus 7%. And all the challenges, like the inflation could be mitigated in a way, that as well the EBIT could increase by EUR 3.4 million, as well the second biggest EBIT in history of the company. If you look how this fits into the total, in the long-term perspective, we see that it's a continuation of writing the line of growth. So if you look back, the chart looks quite busy at the blue part, and it's mainly till 2010, was driven by analog photofinishing. Then you have the digital transformation. And the digital transformation went towards the digital photofinishing. And then you have the peaking in the photofinishing, which is now our main and core business. How does this translate into the EBIT? Here the line is simpler, but the way, the direction is the same, it's going up. It's the second biggest. And you see here as well, until 2010, there was a jump in 2010. This was after the transformation, then a sort of working in steps and another jump in 2016. And since then, the growth could continue. There is one peaking year in between, the 2020. It's the corona year, which was next to all the disadvantages we had with corona, for CEWE, it was stay-at-home effect, which made the consumers reflecting on their memories, and printing their memories, putting it in nice photo products. And as this was in the Q4, a very good Christmas business, it was as well in terms of profitability, very favorable for us. Nice as well and a good message is we are a reliable dividend payer. So the way it goes up, and this is now the 14th year in a row that we can increase the dividend in value. And this is part of our policy. So the idea is that we can increase in value as long as the business permits. And I'm happy that this year, the business permits to be at the 2nd -- at the 14th year. Let's have a look outside or next to the financial KPIs. What else we are -- what else do we put into focus? So I think these great results, you can only receive this, achieve with a great team. So therefore we are really happy, and this is one of the focus we are setting, that we got as a great -- awarded as a great place to work, and last year as well as a great place to start. All of us know the challenges on the employer market. So this is, for us, very important as well to ensure our future with the young talents. Further, sustainability is one important measurement we are looking at on KPI. And here as well, we got an award as one of the European climate leaders. And so all the initiatives, we will come back to the sustainability topic in a dedicated section, but we are happy that we can share that these efforts are seen and awarded. And last but not least, we received the Best Managed Company award, which, in my point of view, is valuing the results and the work of the years before. In the following hour, we will dig in and dive deeper into the group results and the financials. Here Olaf Holzkamper will guide you through. We will have a dedicated session on sustainability and on innovation, which is key for securing our future before we then go into the outlook of '23. Let myself start with photofinishing. You have seen in the complex chart, the big part of photofinishing, which is driving our company's success. So that's our core segment. And the core segment is driven, first of all, as well by product. If we look the last -- if we take the last year, there were 28 different products launched across all categories, if we take on the photobooks, if we take as well calendars or other topics behind. Our team's focused on this. I've taken 2 things out, which is the premiumization. So adding value, getting more valuable products for the consumer and the second one on sustainability. On the premiumization, I will not dig into the product in depth. They are around, so you can discover afterwards. But I put some examples, and this is one of the things like the slipcase, which was developed for last year. And this is where we are having a new speed. And this is as well, of course, increasing the value of the product, and it was awarded by the TIPA. We have other things done on the software, where we have developed more designs that it's easier to collect and create your photobooks, and there are things beyond which we can discover. On the sustainability part, I would like to point out 3 things. The first one is a corporation with a fair trade chocolate, which is Chocolonely. And this is a corporation which is in, I would say, in line with our sustainability approach. So the chocolate is fair trade. And the insert where you have all the chocolate placed, this is all biodegradable. So there's no plastic inside, as for all of our chocolate calendars. Then we looked into the second use. So if you have your paper and calendar with the photos and you open it 24 days, the last day, you can take it out and you can put it as a collage somewhere else in your flat as a poster. And the last thing is that we worked on calendars. This is an example for this one, where you buy the base and then you have calendars, you can exchange each year, and this is all FSC-certified. So we see a product portfolio. We will talk about technological innovations and technologies in a minute. And all this, we will bring with stories to the consumer. And this has been 2 spots we are using during the campaign, to the Christmas campaign. And this is very important for us to transmit these stories to the consumer. It's in TV, but overall as well on a digital way how we approach our consumer. And the people you saw in the film, there are not actors. They are our consumers who are representing our products with us. As a market leader, we have as well a responsibility to look beyond the business and the things we are pushing forward. So we are proud that we see our responsibility in developing as well the photo culture. And to do this, there has been created an award for photo -- CEWE Photo Award. And today, up to date, we could win 600,000 people to hand in their propositions. And not only in Germany, but as well outside of Germany, which means that this is the biggest photo award, which -- existing, so the worldwide biggest. And this is something we continue to do. The next deadline for handing in is ending end of May. And with this deadline -- and for this round, we could win photographer, which is Michel Comte, which is a French photographer and one of the very known fashion photographers who is joining this award, the CPA, as the head of the jury. So coming from the world of the pictures and the emotions, I have now the pleasure to hand over to Olaf, who will take you into the world of figures and facts.

Thank you very much, Yvonne. Let me make it very clear, numbers can be very emotional. Just to have that statement out there in the room. Right. So where do we stand with the numbers? Right. We are in photofinishing as Yvonne has started, so in photofinishing, looking at the volume, we're looking, obviously, at the number of prints, you can see on the left-hand side, increased by 4.4%, all fine. Things are going into the right direction, which is -- and you can see it on the development of the numbers, which is now we had in 2020, the corona year, people were not traveling, but still had enough pictures to order and enough clicks, enough JPEGS, so they could order in 2020. In '21 people were getting into a little bit of not enough picture at home, so they didn't know what to order anymore, and that is why you can see there in the decrease of the volume. And then in '22, you can see now people are traveling again, at least since Q2, the lockdowns have been more and more easing. And you can see it by the more numbers of pictures being taken, more numbers of pictures being ordered. These pictures are in all of our products. So not only single prints, but also the pictures being ordered in CEWE PHOTOBOOKs or as a calendar or greeting card and whatsoever, wall decoration, all that is -- all the prints, every picture is counted in there. So nice development in the number of pictures, nice development in revenue here on the right-hand side. You can see also there nice increase of 4.4% and directly in line with the total number of prints. Now comparing the 2 numbers, 4.4% and 4.4% twice, that by accident, the 2 numbers are the same. And those of you who follow our company since a while may recall last year, may say, wait a minute, didn't you talk about inflation and increasing prices and where is price increase? In the middle, when you're showing 0.0% increase in terms of value per photo, then where is the price increase? Yes, the price increase was there. You can't see it here because underlying, underneath there, there is a change in the product mix. In the -- especially end of the corona phase, we had -- people didn't have that many pictures, so they were taking products that didn't demand many pictures. So many pictures had one picture tickets, like wall decoration on the big wall art topics or puzzles and so on. And they obviously have a higher revenue per picture, and this is exactly the increase you can see here. When people were decorating their home in the 2020, you all know that the home deco companies had a huge increase there in business in the lockdown phase of corona. The same is true for our home decoration wall art. Wall art business, zillions of revenue just with one picture each. And that was increasing this development here from 23.6 to 26.5 eurocent per picture. So that was completely out of the long-term trend. And we're moving into corona was increasing that and now moving out of corona is decreasing that again or keeping that on the same level, stable. But in the long run, you can see that the trend we are on there is exactly the long-term trend we always had seen already pre-corona. So we are back to normal and everything is fine. So that means that we do have a coming back of the very revenue-heavy per picture, wall decoration or puzzle of products like that. And we have coming back there, but we have an increase back to normal of those products that are multi-photo products. And most prominent of the multi-photo products is probably our -- the photobook. And that is exactly what you see when just looking at the volume of the CEWE PHOTOBOOK. This is exactly the increase you're seeing there. You see how much it came down end of last -- in last year in '21. Because people were running short of pictures. That's why the volume there was quite low. And now it's getting back up again, we're getting back to normal. And we are moving the volume up in the multi-photo products and CEWE PHOTOBOOK is certainly one of the most important examples there. So that's the product mix shift is the rationale behind why our revenue per picture was stable last year compared to '21.

Maybe just one question?

Please.

Why do you think is the number of photobooks now in 2023 still pretty much below the…

Because 2 things. For instance, one reason is that in pictures, there's not always the travels of that year, but also as we could see it here with the high level in the COVID times, and that was especially older travels back from 2007 and whatsoever being ordered in books. And that is obviously not to the same amount, but to some amount, through that the last year or the year before is ordered sometime later, a year or 2 later. And these kind of older ones are the ones we are missing right now. Another one we are missing right now is that people last year, in '22, didn't do the far-fetched travel yet. There weren't so many overseas travel. There weren't so many really far travel that are counting into the really big books with many pictures. And that is bringing the pictures down there.

[indiscernible] I think that's still not on the level we had in 2022.

Right. Yes. So we are getting there. And there's still room to move, and there's still completely rational logic why there is a good chance that this is going to move up again to the old levels we are used to.

All in all, in 2022, that was actually leading to great results. Looking at the photofinishing, that segment on top, you can see the revenue. We looked at the 4.4% increase already. And if we get back to the pre-corona level, you can see that there, we are exactly on the long-term trend here, seen in 8.5% increase compared to 2019 in the last pre-corona year. So that's really working well. And if you turn from revenue down to the EBIT level, you see that the 4.4% plus are now in -- on the same level roughly of 3.5% plus an increase here, up to EUR 73.7 million EBIT. And if we are looking into the pre-corona level, it's a plus of EUR 6.8 million we are seeing there or in other words, more than 10% increase in EBIT compared to 2019. So also there, we are back to the old track, back into the normal level, nicely moving up there. So the long-term trend that was always underlying, our numbers was nicely confirmed by 2022. We are just back to normal. Normalization is very important there. Looking at the numbers. We are just moving out of 2 years of corona back into the normal mode. Within the year, the seasonality development was still in the corona situation and moving out of the corona situation. You all are aware of this chart for revenue over the year, and you see Q1 to Q4. The long-term trend due to our digitalization and due to our business development was that we are -- we see an increase in revenue in Q1 and Q4 because people are at home, the weather is bad and you can order quite simply from home. And obviously, Q4 includes Christmas, and that is the occasion where our products are more and more detected as important presents. So Q1 and Q4 are -- will be the winning quarters, whereas Q2 and Q3 are the losing quarters or stable, if at all, because the weather is great and people are out and not ordering products, but taking pictures. And so we have enough pictures, enough materials back again to order in the other 2 quarters. That is the development of seasonality we had been seeing over many, many last years. Now last year, that wasn't quite the case because we were moving out of corona. Q1 normally goes up. It didn't go up last year because the EUR 125 million was the last lockdown quarter we had ever seen in 2021. And that's why the volume of that quarter was so great. And we didn't get to that level in Q2 last year -- sorry, in Q1 last year, because it was not a lockdown quarter. And that's the reason why we are just on the normal trend or not quite even there. And the same just opposite, it's true for the next 2 quarters. Long-term trend, they go down. But last year, we went up because it was back to travel again. People were having pictures again, and we were not comparing to lockdown quarters in '21. '21 were just normal quarters with a rather lower situation there. So nice increases against long-term trend, but just -- that's just the way last year went. Only Q4 was in line with the revenue increase we have been seeing over many years, and that was back to normal in that sense. Same is true for the seasonality on the EBIT level, where the same thing is happening in an even more pronounced way. You can see that here in Q1 '21, we had a great EBIT due to the lockdown. Right now, the EBIT was not bad, but not nearly on that level. The difference was the lockdown in '21 couldn't be matched by '22. And the same is true again as we just looked at for the next 2 quarters, normal development would be down, but last year because we saw more revenue because we saw people traveling again, the profit also went up. Only in Q4, you see our profit was up, and that is exactly a long-term trend is like. So that is a nice development. We have been seeing last year that the big important Q4 for Christmas is confirmed. And throughout the seasonality, throughout the other quarters, we had a different seasonality due to the moving out of corona. Nevertheless, we saw it coming. Our assumptions were completely met, both on the revenue side as well as here on the EBIT side. And all in all, it worked out well. Even for the EBIT margin, how did that develop? We also there, we are in the long-term trend. And you know this chart and it started far lower further in the past. And now we had a nice up to the 2 corona quotas, the 2 corona year, 15.1% and 12.7% were the 2 very, very well-managed corona years. But also in '22, it worked well, and we even matched the last corona year, and we are on a stable EBIT margin level there. And if you're looking at the long-term trend, we are just grabbing up the trend in the -- of the last pre-corona year, and we are back on that trend regarding the EBIT margin. It's a phasing out of the EBIT, of the corona, and it was well managed. You all know that, especially in this number here, there's a lot of inflation that needed to be managed. And a lot of cost inflation on the cost side that need to be counterbalanced on the revenue side. And apparently, it worked all very well because we were able to keep the long-term track regarding the increase of the EBIT margin also in 2022. So much for photofinishing. If we are looking at commercial online-print, also there, the word normalization is probably a very important one. You know that in commercial online-print, we are active with the 2 brands of [indiscernible] production company of the product and Viaprinto and LASERLINE. Looking at the results we're seeing there, you can see that there's a great increase in revenue in commercial online-print, plus 31%. Plus 31% is normalization. You know that the corona years, our corona box here was clearly below the revenue level we had already before corona. And you're all aware of big drivers there. If you don't meet anybody, you don't need business cards. If you don't open up new restaurants, you don't need a new menu card. If you don't organize any marketplace or any concert, you don't need flyers and posters to advertise for these occasions. And all of those were the reasons why the revenue in corona years in commercial online-print was extremely down. Now we are moving up. We are moving out of corona, we are moving up in revenue, again. This is back to normal, back to normal means, in this case, 30% plus. And the big plus we are seeing there is not only the normalization, but we're also seeing that our colleagues in commercial online-print are doing a very important and nice strategic move because they have been installing their best price strategy in commercial online-print, and we are seeing a lot of revenue being taken from there. I think there's -- we are actually concentrating a lot of the market increase, a lot of the market back-to-normal that we are seeing in this business, we are probably concentrating on our brands here. Our colleague was just at an industry gathering, and he was pointing out that the other players in that field were quite annoyed by our best price strategy and could see the profit -- the profitability and the benefits we were taking from there. So we feel strategically, we are exactly in the right way. We have a great and efficient production site in Dresden and we want to strategically make use of that. And this is exactly the track we are on there. So rate development, not only on revenue, but it also is translated into profit level. You can see an increase to EUR 2.3 million from EUR 1.2 million in commercial online-print. And what we need to know is in the 1.7 -- sorry, the EUR 1.2 million, there were already short-term allowances in there of EUR 1.5 million. So if you take them out there, we increased from 0.7% now up to 2.3%. So that's a nice increase in profitability we are seeing there. And we are seeing how much our colleagues were able to drag down the increase in revenue we are seeing up there into a nice increase in profitability. So also in commercial online-print back to normal, and we are on that track, and we'll see how far that can bring us. One comment perhaps because we have this big increase in commercial online-print that's also doing something with the structure of our P&L, and you will see this later when we are talking through the P&L. Looking at retail. You all know that we are running this retail business in order to produce and to sell more photofinishing products. We are running those stores. And even more and more important, we are running those websites to sell more for the finishing products. In the way the brand names of our retail chains, our display, you can see how much the brand of CEWE, the photofinishing brand is moved close to those hardware retail brands. And if you're looking at the shops and moving to Norway, we have our chain Japan photo and being active in Norway. Just from the outside, also there, you can see a lot of presence of brand names CEWE. And if you are even walking through the door into the store, you can see that -- all you can see is basically photofinishing products. You have to search very closely and probably very far in the right, you see a lot of black there, and that is probably cameras, lenses, tripods and the likes. But most of the shop is filled with photofinishing products. And that's the way you can see how much we're actually trying to sell, what we want to sell via those shops. And how little, in some shops like this one here is even left for hardware sales, which we don't want to focus on. So we are reporting the hardware sales in our retail segment, but the ones we actually after is the photofinishing products we are selling there. And there, we are on a great track. We are reporting them in the photofinishing segment. But just revenue-wise, you can guess that it's probably on the same level or sometimes even a bit higher, what we're selling in terms of photofinishing than what we are selling in hardware there. But even the hardware sales only and the profit we are allocating to the hardware is on a good track. You can see here that the hardware turnover was reduced in the last years, EUR 48.7 million, EUR 43.7 million then moving down in corona times into EUR 34.1 million. So if there's no traffic in the shops, then you sell less. Yes, that's what you see. That's the reason why we are actually moving up here, but we are not keen on pushing this in hardware revenue up. Actually, we declined this actively. We brought back the revenue because we are not -- after selling those things, we want to sell photofinishing product. So we are happy with the level we have here. We see a little increase there again because we are in the normalization also there, and we're getting back people back into the shops. People are buying more but nevertheless, compared to pre-corona, we are far below their revenue. The last year was more than a quarter. We are more than a quarter below where we were before. Nevertheless, profitability wise, we are on the same level or even a little bit higher. Here, we have a rounding thing in the win, but we are now at EUR 0.2 million revenue, which is exactly -- EUR 0.2 million EBIT, which is exactly where we want to be. So the strategic developments of posting the photofinishing into the front is happening. And at the same time, the profitability level is on the level where we want it to be. All fine, retail is doing a good job there. Looking at the other segment. You know that the revenue we are reporting there is the futalis revenue. And you can see that this is on a nice track, still nicely growing. So we are operationally moving to the right direction, and also profitability-wise, futalis is walking into the right direction. And if you're looking at the bottom overall, you can see that with the EUR 0.6 million, we are pretty much on the level where we had been before that way, a lot better than we have been before due to the cost of real estate and structural costs and so on that we have there. And if we are looking closely into here, last year, we communicated that actually there was a positive EUR 0.3 million, especially tax in the EBIT. So the minus EUR 0.4 million is actually more a minus EUR 0.7 million in natural terms. So also there, we see a slight increase. All fine, segment other is moving into the right direction. That's nothing to complain about or moving into the right direction. But if we are adding all those things up and getting to the group numbers, then you've seen that we have a total increase of 7%. And each segment, as you can see here again, is contributing with a positive revenue development there. And again, you can see the green part of commercial online-print to how much it has increased as a share, and that is worth keeping in mind when we are looking in more detail through the numbers in a second. On the EBIT level, you can see we are exactly on the trend as we had before. You know that 2020, especially was a special year due to corona lockdowns being very positive for us. But nevertheless, we are back on the old trends we had before. Also the EBIT margin is on a nice level. The reason why it went down 10.4% to 10.2% is the increase of the share of commercial online-print, which is operating at a lower margin. And that's the only reason why there's a slight decline. But all in all, it's fine. Nevertheless, the absolute numbers count. And yes, we have earned more than before. This chart is just to show again the seasonality throughout the year, even in total and you can see that we had the strong -- the difficult Q1 because Q1 last year in '21 was great, but then we caught up throughout the full year. And at the end of the day ended up with a EUR 3.4 million additional EBIT there. Earnings after tax, you see a nice increase. Also, again, there, we are on long-term trends. It all work into the right direction. And here, you might want to ask, okay, why is EUR 7.2 per share, on the same level as 2020 when you actually didn't earn on the same level in absolute terms? The reason is that in between we had to re-projects, we had share buybacks, due to them the number of share assets reduced that we need to calculate in there. And that's why we are back on the same level of -- in terms of earnings per share, even though we didn't quite match the super year of 2020 in terms of earnings after tax. So much for the numbers on a higher level. But in addition to the numbers, obviously, other things are also important for us. And this other thing is sustainability. We have been releasing our 13th sustainability report this year. And this shows for how long we always have been caring about sustainability. And that's why we want to -- trying to introduce into the latest and greatest there. We take it into some more details on the financials.

Sustainability. It's something, I think, which is close to my heart. And I think as managers, we have a responsibility. And we have not only responsibility, but I think without tackling the topic, we will as well have not a sustainable business approach, because the consumer asks for sustainability. Are they ready to pay more for a sustainable product than for another one? I think long term, no. But it's going to be a base if they buy or if they not buy in a longer way. So sustainability is a very large topic. So I would like to show a couple of highlights and achievements, which already have been done. If we look here, the first successes, I wanted to point out 3 things. First of all, the CO2 emissions, which was halved and now is leading to 5.2 million tonnes -- 5.2 tonnes. And that means it's halved, and we are ahead of the target, which was set for this year. So we are outperforming the target for '25. So which is a great thing. And there, again, we are never fully done. There's always things further to improve, but it's the first big milestone. First, we increased the FSC-certified paper now having a share of 95%. The target, of course, is 100 as well not yet fully there, but a big milestone. And in further, we reduced the plastic into the packaging down to 1.6%. And introduced new sustainable products, some of them I have shown earlier on. This is -- this results in these highlights, we can only achieve because the sustainability is anchored within the DNA and is anchored within the approach. This is a view on how CEWE products are evaluated along a scorecard of 40 points regarding their sustainability. And this is not only the process to have a sustainable -- more sustainable product at the end. But as well, it's, of course, taking the employees along, increasing the awareness and the drive to be better in this field. This is the internal view. If we look, we challenge as well our partners, and we have done a sustainability or have handed out a sustainability award to suppliers who were making a great progression. And we could identify DHL and Schiettinger Group last year. And as Olaf said, this is only an excerpt out of the sustainability results and the active activation. And the whole overview, you can find in the sustainability report, which we do now for the 13th time in a row. And there, we are belonging to the first movers having such a long history in this. To finish the sustainability, I think at the end, it's important to have the fact and to have the evaluation, the external evaluation. And here, I can only say that we improved across the most important ESG ratings. We achieved excellent ratings by the 3 most important MSCI, ISS and ESG Sustainalytics. Again, this is a view today. The field is huge. We will not rest on these results, but it's a very good position to start from. And here, I'm happy to hand back to Olaf for more financial details.

For more boring numbers. Why don't you dare to say so. Here we go. And now we get into the details here. And I need to put -- take my glasses off to read the numbers, now. Let's try to make it work. All right. So looking at the P&L first, starting there, the increase we are seeing here at the top, we are seeing a EUR 48 million additional revenue there. And you have seen where it came from, every segment contributed nicely great development. Then in other own work capitalized, you see the number, we have an increase of EUR 1.6 million. It's not a lot. But just for you to know, it was very little before and now it's moving a little bit higher up there. It used to be the own software that we needed to capitalize there. Now since we acquired Hertz, the company Hertz last year, which is the producer of our CEWE Photostation that you can meet in the shops of DM and somewhere else in the world, we have like more than 20,000 of those CEWE photostations out in the world. And as we have the production company and the development company, doing that in-house, we need to activate these things here. And that is a change in the structure we have there. We will see going forward as well. So it just happened there last year for the first time. That's point one. Point 2 is other operating income is also a small move up where you see additional EUR 2.1 million there. And there is things like exchange rate differences and higher operating costs and cost of premises we need to charge to people renting our real estate. So it's in Germany, you would say, [Foreign Language] by the word already you know it's nitty-gritty stuff, but is up to EUR 2.1 million. So it's that's nice, and it's important to know. Big number -- first time big number is EUR 22.8 million more in terms of cost of materials. Now there, obviously, we do see for the first time the price increases out in the world for raw materials and supplies that we have been buying, yes. That's where it is. That's where you see the inflation. And you can see that this is of all those big-ticket items here, that is the only one where even the percent of revenue is increasing not only the big increase in EUR 22.8 million here, but also a percent of revenues increasing to EUR 24.8 million. And that's especially that point where I wanted to highlight that, yes, you have seen the 30.1% increase in commercial online-print. And that's the reason why the share in the structure, the share of commercial online-print is higher than before. Commercial online-print has a very high cost of material in terms of percent in their structure. And that's the reason why the cost of materials part here has been increasing in percent of revenue as well. You're not seeing that kind of structural change in all the other items because that's not where the commercial online-print is having the spikes in their cost structure. For instance, personnel expenses, you can see, yes, there is an increase of EUR 9.9 million more in personnel, in terms of the wages increase we had seen due to the inflation. Obviously, we have been new hiring people also in commercial online-print. In other operating expenses, yes, EUR 14 million more in terms of costs. And so what you see there is logistics. What you see various marketing costs being more expensive than before. You've seen the cost of our real estate premises due to the new building we have been taking on board, and so on and so on. So there is the exchange rate differences that are popping up there again. So also there, we do see an increase in absolute terms. And last point, absolute terms also increased in terms of amortization, digitization -- depreciation, sorry, amortization depreciation due to the acquisition of Hertz, which is the producer of the CEWE photostations. And due to the increase in total number of photostations to 22,000, I think, that we didn't have before. So all of these items increased in absolute terms, but decreased 18% of revenue because we are gaining efficiency. We're seeing that the structure of the P&L is really moving into right direction. We're gaining efficiency there for those items that not necessarily scale up fully with the revenue, whereas material costs obviously have a very large share that is scaling up with the revenue. And the structural change moving to commercial online-print is also resulting in this increase there. So that's the reason why we have this nice structural change here that I think is pointing very much to an increased efficiency in our company, which is great to see. So far P&L. Moving into the balance sheet, you know that on this "Normal balance sheet," we just like to explain 2 things. One is the total size of the balance sheet. You see an increase of EUR 33.2 million here to EUR 632.7 million. That means we have an increase of 5.5% on the balance sheet. If we are looking at an increase of 7% in total on the revenue side, also there makes sense. The balance sheet increase a little bit less than the revenue. So it's all fine, some kind of efficiency also there. Then on the liability side of the balance sheet, yes, equity ratio, we love to be in a stable situation. We have increased the equity into 57.3%. So that is a very rock-solid situation. The tremendous equity we are seeing there is allowing us to keep the borrowing from banks and others down. And which means if at some point in time, now the interest rates rise even further, we are not really affected. I don't to want to say we don't care, we always care, but it doesn't really hit us. It won't hit us and that is a very, very good sign for us. We have a strong balance sheet. CEWE is rock solid. That's important to know. You know that if we discuss things a little bit more in detail, we like to move to the management balance sheet, where the things we don't have to pay neither -- we don't have to pay for neither dividends nor interest where they're moved from the right side, from the liability side to the other side. And this management balance sheet is something that we can now look into in a bit more detail, but no big movements there. Also in terms of total development, EUR 15 million more to EUR 446.4 million capital employed means a plus of 3.5%, 3.5% is again less than the revenue increase of 7%, fine. Also there in terms of some way of efficiency, we are moving into the right direction. We are turning more things around with a little bit increased capital employed only. So that's moving into the right direction. And then we are seeing 2 numbers there that are pretty much the same. You can see here the 15 -- the EUR 14 million increase in non-current assets is pretty much on the same level as the total increase of the capital employed. That's why I like to say, actually, the reason why capital employed was increased here is pretty much only the fixed assets we are seeing there. And you know that we acquired the administrative building close to our headquarter. That's an increase there. And we acquired the company Hertz, which we talked already about. And it's basically those 2 little things we did last year that were increasing the capital employed and that makes a lot of sense in my eyes. If we are looking down here into cash and net working capital, we see those 2 numbers are pretty much the same in terms of size, while that one has a negative sign and that one a positive sign. So they are balancing each other pretty much. And what is driving that? What you can see here, the net working capital increased by EUR 12.2 million. And if we're looking at where that came from, it was pretty much driven by the net operative working capital only. That is accounting for most of it. And if we will look there into what actually drove that up. We did more business. So yes, we have more trade receivables. We have more inventories a little bit, and we have a little bit more trade payables being deducted there. So that's very natural given that we are doing more business. Nevertheless, the EUR 19.2 million, you might say it's not quite natural. It's a bit more of an increase in payables -- in receivables, sorry, in receivables. And yes, it was one big retail partner who didn't pay the last week of the year, but to pay the first week of the next year in 2023. And that's why we were lacking some money there and showing more receivables here than we actually would have shown in a normal operational way. We don't know why this retail partner had did it. It was a big number. We are talking nearly EUR 10 million, and that drove that number up. And this EUR 10 million at the end of the day, that EUR 10 million drove up the working capital and is the reason why we didn't see it in our cash. And if you put that aside, our numbers are pretty much on the same level as they were the year before. So nothing important really happens there. Also in the other net working capital, nothing really important is happening there. It's just normal business. That is on the capital employed side. If you're moving on the capital investment side, yes, we are seeing the increase in equity, and we looked at that already briefly on the other balance sheet. So there is nothing important to know. And as you've seen pretty much in all the balance sheets of the company, if you're looking at the pension accruals will decrease due to the increase in interest rates. No, that's obviously. And that is something you would expect from here as well. So much regarding the changes on the management balance sheet, I think nothing really surprising and everything working into the right direction. If we are looking at the cash flow, what we're seeing there is, first side an important increase here in the cash flow from operating business, you see a nice increase of EUR 27.7 million here. And the biggest part of that is part of back to normal. Last year, we had tremendously high later tax payments because we had many taxes being postponed by the authorities in 2020. Everybody said, we don't know what is happening now. Please keep the money of the taxes for the time being because if you don't know how the world is turning for you in corona, keep the money and make sure you survive. That was the mode in 2020. In '21, the authorities said, Obviously, you did survive. Obviously, you earned a lot of money. So why don't you pay taxes? And we paid takes like crazy and that was the operational operating business was brought back down to EUR 65 million there. And now we are back to normal and this because we didn't have to pay this additional EUR 20 million. The rest is bits and pieces across the board, but that is the most important reason why we are back up to the normal level here. In terms of investments, I mentioned already the 2 things we had in addition, we had the EUR 9 million for the building we acquired close to our headquarter. That's the acquisition, including the renovation of the building in there. And then in terms of companies, we acquired our long-term partner Hertz, and they are in hidden in this EUR 2.1 million here, because the year before we acquired the last piece of Cheerz and Hertz was a little bit less than Cheerz, and that's why it didn't really show up here in this number. But those are the important tickets that actually bring us here to EUR 60 million in last year in terms of investments. So looking at the free cash flow, actually, yes, looking at the free cash flow, it means we are up from EUR 21.5 million to EUR 31.5 million. Now you're seeing the real ups and downs here in terms of free cash flow. And that is important to bear in mind, this number here, EUR 103 million free cash flow, we communicated very, very openly to you that is not real, because due to all, for instance, these tax points, we mentioned in the beginning, that number is artificially -- was artificially increased to over EUR 100 million, and we communicated to you already, when we communicated those numbers, we said, actually, this 100, it's more like 70 if you bring it down to where it really was. And we said here that this 27 -- sorry, 21.5, it's more like a -- it is more like a 60 because we need to correct it by all these things. And that's why this time, we also say the 30 we are seeing there for this year in our number, we just looked at here, 31.5% and 31.5 is again more a 60 if we corrected by the onetime things we had. So the year 2020 was far too high and the next years now we're a little bit too low. Our normal operational free cash flow that we are seeing in our company, it is on the level of like roughly EUR 60 million these years. It was lower in the years pre-corona. We had a free cash flow that was lower than that, but now we feel it's more on the level of 60 roughly. So much regarding the cash flow. And last point to look at is the ROCE. Yes, we had the incredibly high EBIT in 2020 that led to a very high ROCE in 2020. But since then, we are on a normal level. You saw that we saw a slight increase in our capital employed. Also here, as an average of 4 quarters. You can see the same effect in a smaller increase. And that's why it's all fine. Increase in balance sheet, increase in capital, is not drastic, not on the same level as revenue. And that's why we are keeping on the same level in terms of ROCE, as year before 17.6% of growth, we think, is a nice number CEWE is clearly adding value. Adding bad debt. Now we are getting to the point why we're really standing through here for this nearly an hour now, because Reiner is showing you the latest and greatest in terms of innovation.

Same joke.

Same joke as every year, and you're on again.

Every time, every year, I'm behind ROCE. So I don't know if it's nice or not nice.

Great things come from great people.

Nevertheless. Welcome to this nice event in person again. And I've the pleasure to present you things that happened in the last year with respect to innovation. Of course, like all the years before, we have a real focus on innovation. Mrs. Rostock was telling you 28 new products, all sustainability matters and really, really successful implement before the last Christmas season. That is very important. This is really strengthening our brand, but also really investing in the idea of what is behind the picture? What is the emotional value of the picture is heavily represented in the CEWE Photo Award, which really moves to a higher level of our brand, which is really, really important. The multi-brand strategy, you see our brands here is very, very important for us. CEWE is covering a huge portion of the market, but where other brands like Pixum, Cheerz, DeinDesign, which are much more mobile related, different age groups, is really making that a bigger and technology, which I'll show you later, is heavily implemented in these brands now. That was not the case in the years before where we met, but if you order a WhiteWall coffee table book, guess what technology is behind, if you get a suggestion at Pixum for a real nice photobook, guess what technology is behind. It's done in the MAIC, the Mobile and Artificial Intelligent Campus, which we introduced to you before. And this is really, really driving the number of mobile orders we are getting. And I really think we can claim, we get the most orders for mobile phones from mobile taking pictures in Europe, maybe in the whole world. As you know, CEWE has no innovation department. Every employee of CEWE can be an innovator if she or he wants. And last -- this year, pardon me, we had the first innovation days in person again after 3 years. And as we all -- we had the discussion, we don't have Photokina anymore. We need with event, we need this event to get the spirit transferred to our people. We need this event, as you see, it's more than 9,000 people. And we also had Yvonne here. Yvonne was the first time there, even she was not in charge, she came there because as I said, innovation is very important and we had the pleasure to show her what we are doing. As usual, we are presenting all the results of our roadmap. All the products we think which can be relevant for our market through our employees. And they vote, no matter if it's wall decor, it's a future shown to every person, totally new ideas, and it's not only product related, it's production related. It's service-oriented. It's really, really great to see all of these examples, which are a real success factor for our company. And most of you follow us in years, you know we are not only talking about that, we are really trying to do that. And as usual, I'm taking a risk, [indiscernible] in the discussion before [indiscernible] my mobile phone is with Olaf. So we are getting more and more mobile orders. No, it's okay. And surprisingly for me, 1/4 of the mobile orders are not taken by the app, which is extremely successful. We got the EISA award last year for the best app. They are made within the browser on the mobile phone. And of course, we have to do more to get this beautiful product in the [indiscernible] also in a browser. And it's very complicated, as you know, we suggest what is the best 150 images out of 500. We suggest layouts and this is all done on the devices of our customers. So it's done either on the mobile phone or on the desktop. And last year, we really had a great breakthrough. What you're seeing here, it's AI technology running in the browser on the device of our customers. So what you see here, I don't want to save it, is, we don't have it live, but the best images are selected now. So this solution you are seeing here, which is by the way live. So I'm really in the Internet via the hotel Wi-Fi. You see a layout suggestion from my images, which are only related to mountains, normally, you see twin images for me. And what you're seeing here is fully automatically done on the device. So what you're seeing here in the layout is AI, crypted, of course, but not a competitor can link on that and is fully automatically done, no matter if it's on the mobile phone, no matter if it's done here. And I'm going to a page now to show you our technology we have implemented here. In a mobile phone, you want the image, which is cropped correctly. For example, you see here our dog. And normally, you have all the center crops. And if I take now the image of my wife and her friend, you see it's not a center crop. The system automatically detects depend on the aspect ratio of this image. But to show, look here at the dog, it's totally left-hand sided. See it's live, it's going via the Internet. It really grabs the relevant pieces. So if you get a suggestion on the mobile phone, of course, you don't have to do a lot of things. And to show you, that it's not all perfect, I take this image. So of course, I would have expected that my dog appears there. But the system said, it's more information in the service station, so it takes the service station. But of course, it's pretty easy you go in there you move the dog there and the thing is done. So that's also a AI technology in-house developed by us, delivered via browser to our consumers. And I hope you can see no matter where it is, on the CEWE Photostation, on the desktop, on the mobile phone, and now on your browser, we will enable for the next Christmas season, all of our customers to make this beautiful CEWE products. And Christmas season 2023, I think the -- giving back to Yvonne to have and show you the outlook for next year.

[indiscernible] and there needs to be probably AI [indiscernible] little module where there's a lot of AI in there making it happen. And this way, whether it's the dropping, whether it's collecting a picture, whether it's [indiscernible]. There's many of those things that are happening right now, where AI gradually more and more moving into our [indiscernible]. One more point, if you remember last time, I showed you, we have our digital charter, we do only things what people allow us, there's nothing going to servers elsewhere. It's all done in-house. So we respect privacy and treat each [indiscernible].

Thank you, Reiner. Thank you, Olaf. So let's come to the outlook. But before we look forward, I think from the figures we have seen, I would like to use the momentum as well to thank the team, our partners, our retailers and you as well for the trust into the company, and the consumers into the brand. So thank you very much in this case. And now let's have a look forward. If you look forward, the year has still some challenges for us. The good news about it are that the challenges in the past have been solidly played by CEWE. So that means there seems to be the products, the ideas, there seems to be more valuable for the consumer than just the price. So where would you save on, potentially, not too much on saving on your memories or the gifts you would like to present to your family over Christmas. So it seems we have a good foundation there, and this is going to protect us as well in the next future. With knowing this, we are setting a new target for our CEWE sales for 2023. And you see in the line, we plan to continue this line of growth, in this impressive line, and we target up to EUR 780 million in turnover. We have, again, included a range because all the exogenous, external effects, we cannot yet completely change; inflation, war, logistic, product availability, et cetera. So I think it would be not a good thing to do. We have to reflect it into this range. So if we look here, how does this translate into the EBIT. And here again, we plan to continue the line of pricing results, and we put up the target up to EUR 82 million, again in the range with all the external effects apply. Sometimes it's easy to put a number on the paper. The question is going to be how we are going to achieve this. Without telling too much, it is the way that we build on our strength, and the strength I would summarize in 2 charts. The first one is targeting that in a way, we are a company who is approaching omnichannel. And omnichannel gives us a strength because the consumer can decide whether they are going to go via the software, via the website, via the app or on the point of sales. They have the full choice where to create our products and where to pick them up, whether it's mail order or whether it's in store. And this is a USP versus some of our competitors. And as well the great partnership and here, you see only a selection of the partners, with our retail partners is going to give us a backwind. If we look on the second dimension, I would like to go for the brands. And here, the brand portfolio, I see real potential in because we have covering different brands who are targeting different consumers, and are very complementary to each other. If you take the Cheerz to young mobile, a child, then you take the Whitewall targeting the experts, the professionals, the artists on a nearly ultra-premium approach. And then you have Pixum and CEWE in the middle, and with other technologies as well as, DeinDesign. So I think we are having a great treasure here for the future. If you look in the middle, we are market leader today. And this we need to thrive and to continually thrive by the innovation. So we have seen some of the things behind the curtains, the AI in technology, but as well there is products. And there are just a way of telling the story to make the consumer understand what they can do with our products. On the right-hand side is that it's not given because as a market leader as well, we are developing the market. So we continue to invest in this development, and our marketing budget is increasing in a CAGR of 20%. We support the whole photo idea, the photo vision with the awards. And all this coming together in a good brand awareness, Germany Airport, as an example, with 74% aided but as well as 57% unaided, which I think is really a strong base to build on. And all this centers, and this is our approach, putting the consumer in the center, and the consumer is appreciating this individualization, personalization and the service they can get, and they gave us a Net Promoter Score of 62%. This is ranking amongst some of the companies like Apple or David Hales. You know what I mean. So I think this is a real treasure. And this gives us the confidence to build on those strengths. Nevertheless, all the results and the targets we are setting, we won't achieve without a great team. So if we look here, the team is in the center and the team is going to be the foundation of building the future. And here, we launched the WE in CEWE, so an initiative where we are defining together in a very participative process, our values, our ways of working together, our dialogues. And this, we expect as well will give us new collaboration ideas, cross-brand exchanges, cross-country exchanges to get the best out for the consumer. And as well finally, this allows the talent flow between all these divisions, departments to have the best going forward. So with this, we in CEWE, we think that we will permit the growth of the total company, but as well we will encourage the growth of our own teams beyond of what they are already doing today. So this would be the team, the team I would close. I'm looking very much forward to my first year in CEWE and being part of this fabulous team and writing the success story, continue writing the success story together with them. That would mean, for today, we are at the end of the official presentation. And thank you very much for the attention to the ones who are connected online, and we are open now for the Q&A session. Thank you very much.