Quicky on Cewe (CWC GR)

Photobooks are great … for (wierd) people like me …

This is not investment advice. Please read the disclaimer. I might own discussed stock(s) currently or at a later time. I might transact in any securities at any time.

Issues: I wanted to take a look at Cewe for some time, and started looking in more detail some weeks ago…
The Photofinisihing segment seems to earn healthy marings and is the most important segment (despite photobook growth coming down). Overall Ebit margin was 11% in 2020 (very much the high), highlighting the issues of the two other segments. I stopped short of abandoning the idea here, and waited for 2021 results and annual report today…

The company Cewe Stiftung & Co KGAA or its product offering is well known in Germany through their Cewe photobook products and services.

I love travelling and do miss it a lot — especially long distance travel to more interesting/exotic countries where one can discover different cultures, ways of living and eat great food. During the last two years I merely did smaller trips, ie sailing, but I did not fly to any of those great Asian countries. They gave us more time to catch up on past travels. We (read my girlfriend) used the time to finish some of our picture books (above). I love these books! They are the opposite of thousands of pictures on ones iPhone. Such books contain a few carefully selected and potentially edited pictures. The best pictures of a great trip. I often recognize these books walking by the bookshelf and flip through them or I remeber a great trip and take a look. It is also much more fun (for me) to present such a book to friends and family instead of the thousand pics on the phone. I also enjoy the expereince much more at the other side, when friends show me such a book. Of course, it is time consuming to select the best pictures, maybe edit them, and create a photobook. But there is also a learning effect involved with using the software.

  • We used aldi’s photobook product for a few trips but then ‘upgraded’ to Cewe’s product because we deemed the printing quality not good enough, especially considering our (her!) ‘time invest’.

Besides the obvious question of how many (wierd) people are out there who enjoy doing things without their mobile phone, thinking about other drivers is important. For us (her) the usual occasion are holidays/travel for creating a Cewe picture book, for others it might be life events like a wedding/baby. Do once ‘acquired’ customers become loyal and use Cewe for years or even decades or are they willing to switch to another commapny’s offering? Or do they simply to not create any picture books after a while?

Cameras and photos taken by cameras were displaced by smarphones. Almost all pictures today are taken by smartphones. I guess the share might be higher during holiday (a prime categorie fore printing photos/books) but might decrease as well since picture quality of smartphones has increased a lot recently. This is even true for my seecond class smartphone.

Cewe seems to appeal to consumer trends as the share of photos taken by smartphone increased steadily (we also see the nice Christmas effect here). All the pictures on our mobile phones come with new challenges. After holidays I often ask friends to upload all the pictures send in group chats (with low quality) to dropbox or something. Often with not exactly the highest respone rates. But, below we can see the Cewe is aware of the problem.

Since picture books is only one of many product offerings time to take a look at the company. The company reports in three segment. Total revenue is split c. 50/50 between Germany and international:

  • Retail (grey)
  • commercial online-printing (green): the claim online print is more efficient
  • Photofinishing is the biggest segment (digital: red; analog: blue) , including analog/digital prints, but mostly gifts and photobook

The stock () .


The core segment contributes most revenue (85% in 2021) and most if not all operating profits. Since 2000 the segment’s share of digital photofinishing increased steadily to almost 100% today. Photobooks (above) can be viewed as the segment’s signature product: high quality, including many pictures at once, driving revenue per photo.

Ebit margin development is continuing its positive trend, besides a special 2020 year with a positve corona stay-at-home effect for strong X-mas business.

People might restart traveling. Hopefully, we will all go on vacations soon and restart travelling the world, especiall long-distance travelling should be an important driver. On the other hand, if we spend more time outside our homes we have less time for actually finishing photobooks or other products because hanging out with friends and visiting restaurants and bars is also great. There are two opposing effects, but travelling should revert for ever, and spending time outside with people might ‘overshoot’ in the short term and revert back to normal levels… Thus, photobooks etc. from 2022 events might get printed with a good time lag. If photobook growth comes back to pre-covid levels this could be a long-term profitability driver. 75 million exemplaries were sold since 2005.

  • I recently heard that during easter a record number of Germans is going on vacation.

For the photofinishing segment to excel, Cewe needs to catch future consumer trends and always stay on top of product development, i.e. cups, calendars, and complimentary products as picture frames. This is not easy, but possible I believe.


Cewe operates 100 stationary shops (reduced from 140) in non-German European countries, selling cameras and other products (included in retail segment reporting). Currently, these operations are not very profitable but the turnaround seems to work. Margins shall be further optimized.

These stationary and online shops act foremost as an additional channel for photofinishing sales which are excluded in retail segment reporting but shown in photofinishing segment, thus the retail segment is a bit more profitable than per segment reporting.


The commercial segment generates sales from online maketing prints in Germany and other European countries via various online platforms, all with a modern design. Cewe provides less software for commercial clients vs, i.e., Cewe Fotobuch.

Cewe claims that online print is more efficient and Cewe could act as ‘natural consolidator’ in the industry. Printing flyers online is surprisingly cheap. With € 0.01 per flyer (saxoprint), I know why my mailbox gets spammed — it is cheap local marketing — and I wonder how to generate a profit from this.

Employees are not the happiest but the service seems to be good, based on tests. I suppose here, the bad rating (1.8/5) results from the usual effect that customers tend to write reviews if they are not satisfied (I did so on amazon, despite it was 100% my fault).

Commercial online printing sales volume is still depressed due to corona, but operating ebit signals successful turnaround.


Cewe’s 2021 net profit was €49m or €6.77 of EPS, slightly down (-6%) from €52m and €7.20 in 2020. Based on a market value of € 710m (€95 per share), Cewe trades on a trailing 14.5x P/E or a 7% earnings yield and a 13x fwd P/E with 2.5% dividend yield after the stock was down -4% today based on conservative 2022 outlook.

€ 65-80m Ebit is expected for 2022 with a mid-point close to 2021 levels. Several factors, incl. inflation, Rus/Ukr and reopenings, result in high uncertainty levels.

Equity story

Consolidator. Acquisitions play a role in the company’s strategy. Cheers (2018) and WhiteWall (2019) were bought in recent years.

Solid returns on capital. The prio one long-term goal is ‘sustainable profitable and capital efficient growth’. Reported ROCE is in the mid-teens and might rise further with successful turnarounds in retail and commercial.

Dividend raise for 13th time in a row was proposed. Next proposed dividend is for € 2.35 after 2.30, signaling continuity and catering to a special breed of investors.

Shareholders, structure & management

Most employees are shareholders. Cewe has an employee share program (sadly not that common in Germany), resulting in more than 80% of employees being shareholders (planned 2021 divi). I like that a lot!

The current CEO will not continue to work at Cewe in 2023 because the board and the CEO had different opinions about leading the company (what does that mean?), news from March 17 2022. This news provided some reasons and was a bit wierd (dgap).

The & Co. KGaA business form is a crude German relict for saving taxes and limit personal liability (using a corporation with limited liability instead of private person for unlimited liability) if I remember correctly to my learnings more then ten years ago.

The Neumüller CEWE COLOR Stiftung (3%) shall ensure that the founder’s corporate philosophy lives on. For management activities it receives € 50k p.a. (wierd? but OK I guess).

AN assets and CN assets are big shareholders (27%) and act as vehicles for the founder’s heirs.

My preliminary conclusion is that Cewe is an interesting company to watch. Who knows, maybe 2022 results surprise on the downside with all the uncertainty factors and one can buy shares way cheaper.

I hope you enjoyed this post.

  • Add 1: Even my mother — about the most untalented person I know regarding working with PCs — managed to create a Cewe picturebook. Why Cewe? Clearly recommended as the higher quality product for a significant ‘life event’.

  • Smells like trouble ahead: New female CEO announced while the old CEO — who’s contract was not extended due to some issues like performance and support of female employees or ‘Frauenförderung‘ — was announced as usual board member by the founder’s son who used his special rights for this (Handelsblatt, Sept 2022)

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