Q2 2026 Cewe Stiftung & Co KGaA Earnings Call
Speaker #1: Welcome, ladies and gentlemen, to the earnings call of CZ Group. The publication of the first half-year figures. 2026. I would like to welcome CEO Thomas Meers and CFO Söker Hintze, who will speak in a moment, and guide us through the figures.
Speaker #1: But before I hand over to the management board, please note that you have the option of switching your camera on and off. In this case, you will be visible during the entire presentation.
Speaker #1: But not on the recording. The recording will be stopped before the Q&A session, and having said this, Mr. Meers, the stage is yours.
Speaker #2: Yes, wonderful and very warm welcome, and a very good morning to all of you.
Speaker #3: Yeah, also from my side, very warm welcome.
Speaker #2: Yes, it's a beautiful day in Oldenburg. The heat is not yet up, so I'm sure we will get into a very beautiful summer day today.
Speaker #2: And, you know, summer is an important time for our clients to take a lot of pictures, and I hope either you had your holidays already and took a lot of pictures and are in the face of preparing your photo product, or you will be still going on holiday and do so.
Speaker #2: We have a very good call this morning, so we are proud to announce very good figures for the first half-year. The Q2 was really strong, Q2, and also we would like obviously to reiterate our very beautiful story of the acquisition.
Speaker #2: We did announce actually during my holidays, so I know some of you have been on this call, but all of you, so of course we will reflect on this acquisition, which we announced in July where we had this signing.
Speaker #2: So I would say a call with good news for today and, well, let's start and let's start with the latest news, which are of course no news anymore, but it's important to reflect a little bit to give you again our view on why we did so, what is going to happen, what is the outlook for the Kodak acquisition.
Speaker #2: And, well, we acquired the Kodak Alaris, and I will come to that one. It sounds all a bit complicated, but in fact it's very easy.
Speaker #2: The global instant photo business of Kodak Alaris, which is called Kodak Moments, and which is important is a very strong brand and something which will strengthen our brand portfolio here.
Speaker #2: So you know us, we are not only the CV brand, we are a so-called household brands. We are managing a diverse portfolio of brands, maybe Pixel, maybe Whiteboard, and we will add a really strong international, and we can say global, a really global brand to our brand portfolio, which of course is based on the iconic Kodak brand.
Speaker #2: You all will know it. It's a brand which emerged in the film business, which is still very strong. Of course, it had its challenges, but I will show you the Kodak Moments brand is a fresh brand.
Speaker #2: It's a strong brand, especially in the US. It's a young brand also. Kodak Moments, I mean, if you happen to look it up in a dictionary, it's something which found its way into dictionaries and it's defined as something which is really a moment which is a terrible moment and which was really the this brand was loaded by social media in the past 10 years, especially in the US.
Speaker #2: So what is Kodak Moments doing? So it's very similar to what we call our onsite finishing business. So if you happen to live in Germany and you walk into a DM drugstore, for example, you might find our red CV photo stations, or if you happen to live in the UK and you walk into a boot store, you will find our CV photo stations.
Speaker #2: Or if you happen to live in the Netherlands and you walk into a Kodak photo store, you will find them and if you happen to live in France, and you walk into a Leclerc, you will find the CV photo stations there where you can print onsite this is why we call it onsite finishing where you can print onsite your pictures.
Speaker #2: And this is a very similar business, so they provide the hardware. You can see this in the upper right corner. Into retail locations, obviously they provide the software for this hardware.
Speaker #2: Obviously, there are products which consumers actually can put on with different designs and forms and shapes and whatnot. But, and I will come to that in a little bit, Kodak Moments also produces the, as we call it, it's quite a technical term, the consumables.
Speaker #2: So the media kits, which go into this hardware, because, you know, if you want to print something, there must be something inside. And I will come to this in a little bit.
Speaker #2: They have the strong advantage and this is one of the strategic arsenals the strong advantage of having a production facility producing these consumables. So well, you see here for the first time, I would say for the first time in one of our analysts call, actually we are showing the globe.
Speaker #2: We're not showing Europe and I will come to that in a minute. We are showing really the globe because Kodak Moments is serving retailers around the globe.
Speaker #2: They're not only some retailers, really strong retailers and, you know, if you've been to the US and I'm sure you have been to the US, you know CVS, you know Walmart, Latin America pharmacy as one of the strongest drugstores chains in Mexico, Kmart in Australia.
Speaker #2: But well, you know, maybe your summer holidays took you to Disneyland and Paris, could be, or will take you to Disneyland and Paris. You know, Kodak Moments is also very active in amusement parks, Disneyland, is a very good example for that one.
Speaker #2: So if you're on the roller coasters, and this is really, I would say, top-notch technology, which is built into Disneyland, Paris, you can imagine the right moment in a roller coaster pictures have to be taken you can see them on screens, you can buy them as a digital product, you can buy them as a printed product.
Speaker #2: So they are also in locations like that. And well, talking about technology, with this deal we also bought about 400 patents in the sphere of onsite finishing here.
Speaker #2: So also very interesting well, you know, patents are important in today's world. So we also acquired about 400 patents. No, we well, if I say we did acquire, we have to be sure we will acquire because yes, we signed the deal, but the closing is not yet done.
Speaker #2: We will come to that in a minute. So forgive me for this. So Kodak Moments, in a more, let's say, fact-based sheet here, what is that company about?
Speaker #2: It's about 200 million euros of turnover we will have 500 new colleagues joining the CV group, including some in the production I will come to that one in a minute.
Speaker #2: They will they are serving about 16,000 points of sales directly with 37,000 connected photo stations. We have about 25,000. They serve also a lot more, which are not connected, but that's a different business.
Speaker #2: They do about 1.5 billion prints annually. We do in our onsite finishing about 400 million just to give you a little bit of order of magnitude here.
Speaker #2: And as said, they have a production site in Windsor, Colorado. The main office of Kodak Moments where most people which is upstate New York.
Speaker #2: So I would say closer to Toronto than to New York City. Yeah, and again, you know, this is the map. Well, we would have focused a bit more and just showed you the European map, but that's the map you have been used to.
Speaker #2: This is where the CV group is being present. We are present in most European markets. You know we are the European market leader. And now we will add the global scope of the network of Kodak Moments.
Speaker #2: CV, your company, well, if you're an investor, and if you're not yet, I want to become one, your company will become a real global company with activities around the globe.
Speaker #2: The main ones, the key markets there are the US, Mexico, Canada, and Australia. This is where most of the revenue outside of Europe, because they are active in Europe as well, outside of Europe is taking place.
Speaker #2: So we're adding really new key markets. And well, this you know, I told you what they are doing. It's a brand which connects with consumers at the point of sale.
Speaker #2: This is something which always made CV very special. We talked a lot in these calls about on omni-channel. Omni-channel here, which we are driving.
Speaker #2: And this, of course, strengthened and will strengthen our omni-channel position around the world. So it's something which made this company always special. This is how we grew the business.
Speaker #2: And this is how we will be growing the business. Well, and retail has been important and is still very important. For CV, which, you know, is very different to some of the competitors, which limits them in their growth as well.
Speaker #2: Yeah, I told you, and this is nice, these are our photo finishing brands and now we will add Kodak Moments to that one. We made it a bit bigger and put it more into the center because this is the news, obviously, here.
Speaker #2: I talked to you about the production so what is production? What does production mean? If we talk about Kodak Moments, it's about, and this is the subline you see here on the side.
Speaker #2: On the sign, the thermal media manufacturing. This is a photo actually in Colorado. Yeah, and this is how it looks. A bit dry. Well, we know that now in Germany and in Europe it's a bit dry as well here.
Speaker #2: So it's a bit dry. There's not a lot around. So it's really it's in the, you know, in the close to Denver, Colorado. On the footsteps of the Rocky Mountains.
Speaker #2: So Rocky Mountains is quite nice, but down there, pretty dry. And well, not flat land where not a lot is happening actually. And white thermal media.
Speaker #2: Well, that's the technique that most photo stations around the world use in order to print on paper. So there is not an inkjet printer or a laser printer in there.
Speaker #2: So it's a thermal media that means there's a so-called ribbon, which connects with the paper and the ribbon brings basically the color of the picture onto the paper.
Speaker #2: And this is a thermal process. And which takes place within the photo station. And of course, this material must be produced. And this is a photo from the manufacturing side in Windsor in Colorado on the so-called wet end.
Speaker #2: So this is gravure printing machine. It's a huge machine. A lot larger, a lot different to what we used to have here. It's about, I don't know, about 50 meters long, if I would guess, and about, I don't know, 80 meters high.
Speaker #2: So it's a monster, I would say. Large cylinders. And there they print on these ribbons. It's a very thin. It's I don't know, it's about a tenth of a millimeter.
Speaker #2: It's a very thin foil, which will then connect with the paper. So this is the process which takes place here in the so-called wet end.
Speaker #2: And then there's a dry end, right? It means there's no printing, no chemicals involved, where those so-called media kits, which at the end go inside the photo stations, are being produced.
Speaker #2: We also actually, we have these media kits. We have them as well. But as of now, we buy them. We buy them from different suppliers.
Speaker #2: They're all from Asia. We have had challenges also in the, you know, securing our supply chain. You might remember the crisis we had in the Suez Channel and so on and so on.
Speaker #2: We had quite a huge dependencies. So with this step, actually, it's a vertical integration. We are doing, and we make ourselves a bit more independent from these suppliers, which is an important part of the strategic rationale we're doing here.
Speaker #2: So what's happening? And this is what makes this deal a little bit more complicated than just normal acquisition. It's a carve-out. So there's a company called Kodak Galaris.
Speaker #2: This Kodak Galaris company actually emerged when Eastman Kodak went bankrupt in 2012. Then this company was spun off. And in this company, they're basically two main business units.
Speaker #2: And in one, there are also two main business fields. So two main business units. One is Galaris, they call it mostly Galaris, not Kodak Galaris anymore.
Speaker #2: It's a B2B field where they produce scanners. So actually, they produce the machine, the hardware, the scanners on four companies which have a huge demand of scanning documents, libraries, and things like that.
Speaker #2: So a totally different business, nothing we're in. And we don't want to be in there. To be quite honest. And in the Kodak Moments business unit, they have the Kodak Moments brands, which is this retail photo solution.
Speaker #2: I talked about this one the last couple of minutes. And then there is the film, actually distribution analog 35 millimeters film for cameras. Which carries the Kodak professional brand.
Speaker #2: And we will be carving out this retail photo solution business out of Kodak Galaris. We will take the Kodak Moments brand out of Kodak Galaris.
Speaker #2: It's a perpetual recurring license from Eastman Kodak. So we don't buy this brand, but it's irrevocable. So it's forever we are allowed to use and work with this brand.
Speaker #2: So this is the transaction scope. And it does make also for finance, this transaction a little bit more complex than others, right?
Speaker #1: Yeah, absolutely.
Speaker #2: So a couple of key facts again. I talked about the carve-out here. It's part of Kodak Galaris. And of course, this closing is subject to regulatory approvals.
Speaker #2: And well, we expect completion and there are a couple of more closing conditions as you can imagine in this deal that just regulatory things, the carve-out has to be managed.
Speaker #2: So within 6 to 12 months, that's fair to say. So we have transaction pre-closing cost. You saw that in the announcement of our figures.
Speaker #2: Well, that's part of the deal. Nothing special about it. It's well calculated in our regulations. So nothing to worry about. But well, you know, you need to hire a couple of lawyers.
Speaker #2: You need to hire a couple of people with which do due diligence. I mean, you don't want to run we don't want to run and you don't want us to run into blind into such an acquisition.
Speaker #2: We need to contract, we need a good due diligence. And obviously, there are some costs associated with that one. The purchase price, we communicated that.
Speaker #2: So the enterprise value is about 88 million, which then of course, there's an equity there's a bridge then. And we assume that there will be a cut about a little bit more than 70 million euro, depending on the final bridge there.
Speaker #2: And profitability, yes, this currently, because you know, it's something which was owned by private equity for a long time. They have not invested. They have not really been growing.
Speaker #2: They have not acquired new retail partners. New retail partners, you know, use a little bit of investment there. So we will start with a single digit profitability.
Speaker #2: So it's a profitable business. We did not acquire anything, which is like distressed or something like this. But it's something which will get a lot more profitable under our hood.
Speaker #2: So this is important to note here. Strategic rationale and I think I reflected a little bit already in my speech here. So it's really the combining strength of two strong brands.
Speaker #2: CV is a very strong in Europe. And to be quite honest, non-existing outside Europe. Kodak Moments is very strong outside Europe. So it's something we see the opportunity.
Speaker #2: And our instant photo business growth, our instant photo business is growing. And we will be having a stronger growth right here. And obviously also adding more geographies brings growth to us.
Speaker #2: But we will be growing the Kodak Moments business. So it's not about acquiring a stable business. It's about acquiring a growth platform here. So oh, this is the second point here.
Speaker #2: Yeah, so you know, we want to scale the business geographically. Adding more retailers. We have a huge chance for adding a real growth engine to the CV business.
Speaker #2: It's a very high strategic fit. Well, if we talk about strategic fit, we also have to talk about people. I realized I didn't talk about people, but that's also very important.
Speaker #2: I mean, if we do an acquisition, we look really closely to the people. Will those people fit our culture? You know, can we build a combined company here which, you know, is based on the same values?
Speaker #2: And we found very passionate people. Very, very enthusiastic people about photo. Very enthusiastic people about us acquiring that business. Very enthusiastic about that. Quality-driven people.
Speaker #2: So this is a really a great bunch of people which will be joining the CV group. We are very proud. And that was important for us as well.
Speaker #2: So we can talk about revenue. We can talk about profitability. We can talk about strategy. But to have the right people on board is really important.
Speaker #2: And we have the feeling that this group of people fits perfectly to our group of people here. And again, omnichannel is a very important point.
Speaker #2: You know, we have been driving forward this omnichannel approach. If you look at what we do with our retailers here, and we see a lot of chances to add exactly the same notion to Kodak Moments.
Speaker #2: So again, part of the growth story here. We believe in retail. You know, we see it. We see it every day. What's happening here?
Speaker #2: You know, we get a new it's the entry point for many, many people connecting with our brands. I just invite you to go into these retailers look into the retailers and see what especially young people are doing.
Speaker #2: Gen Z, this is the target group of onsite printing. I mean, if you go into any DM, you know, around noontime, you see a lot of people after school, young girls especially, looking at beauty products and printing pictures.
Speaker #2: So this is a really highly attractive target group, which we will be well, adding actually. Well, we are addressing the target group with CV, but adding geographically here with this acquisition.
Speaker #2: I talked about the international expansion. You know, new core markets are being added to our portfolio. First, the US, Canada, Mexico, and Australia. Really strong markets.
Speaker #2: And we see a lot of potential for growth, especially in these markets. May there be even more growth options. You have been seeing that, you know, there's India on the map.
Speaker #2: There's China on the map. So looking at the current revenues, which Kodak Moments does in these markets, this is currently a rather small. There might be even more potential there, but this is not factored in into our thoughts as of now.
Speaker #2: But we might be looking in, I don't know, one, two, three years into that as well and see if there's more potential there. And I talked about the vertical integration.
Speaker #2: You know, it's more control. It's value creation. It's securing the supply chain. So very important step here to be more vertically integrated in this important business field.
Speaker #2: Yeah, what's going to happen? I mean, signing well, it's not today. Well, it was back about what, three weeks ago, something like this. We did the signing.
Speaker #2: Obviously, we are in the preparation now for closing there. Preparation closing. We are really you know, on full throttle here. There are a lot of things which needs to be done.
Speaker #2: But obviously, we have a high interest to shorten this period of time as much as possible. They have a high interest in shortening that one.
Speaker #2: So I can't tell you, you know, there's so many dependencies on there. We expect about 6 to 12 months to closing. And then it's about integration and growing the business.
Speaker #2: I mean, really, this is a growth case which we acquired. This is a growth case which adds profits already. And we'll be adding profitability as well.
Speaker #2: There's a lot of scaling options in there. So we are very strong about this one. This case changes the CV group dramatically. For the better.
Speaker #2: Really for the better. So yeah, isn't that nice? It's about Kodak Moments. You know, the CV brand is about joy. We thought, isn't that nice that we could create moments of joy together now?
Speaker #2: And this is what it's all about. So these two brands, really, and these two businesses fit very well together. So tell me a little bit more into the strategic perspective here.
Speaker #2: We also completed our sale of the commercial online print. I mean, to be quite frank, this is also only a couple of weeks ago.
Speaker #2: I mean, it's not like half a year or a year or two years ago. This is just a couple of weeks ago. We changed the scope the strategy well, not the strategy, because we talked to you.
Speaker #2: The two of us talked to you about it a year now, about what we are going to do with CV. We told you we're going to focus on photo finishing.
Speaker #2: And well, obviously, that, you know, to focus on something, means what you don't focus. What you maybe defocus in some ways. So I mean, it's always easier to say what you want to do.
Speaker #2: But if you say what you want to do, you also need to say what you don't want to do anymore. And this is what we did.
Speaker #2: We did a very nice transaction on the commercial online print division. We will we have been seeing some cost in half one, 2026 here.
Speaker #2: And you will see that in Zirka's presentation. But there will be a strong benefit coming up in the second half of the year and Q3, the closing has been done beginning of July.
Speaker #2: And obviously, we expect a pretty high, nice effect you will come back to that one, which you can see it will be seeing in our Q3 figures.
Speaker #2: So this was strategically very well for the CV group, but it was also operational. Deal was a very good deal for the CV group.
Speaker #2: So this, you know, we for us, it's almost forgotten, Zirka, a little bit. But, you know, it's the first time in our analyst call that we can actually talk about the closing being done here.
Speaker #2: And this has a high impact. But it's something very consistent to the strategic rationale, which we have been talking to you for the past 12 months.
Speaker #2: So we sold that. It's closed. Oh, it says here, yeah, completely effective July 2nd. So we are a finishing company. We are a brand company.
Speaker #2: We are a house of brands. Focusing on photo finishing. And now we are global. So yeah, the sale, it says here, also improved CV's financial figures.
Speaker #2: You can say that we talked to you about that one. So and now combining all these things together, I think you will be looking at a very strong growth engine within the CV company.
Speaker #2: And now let's look a little bit to our results.
Speaker #1: Okay. So yeah, with this being said, I mean, you will probably remind remember all the strategic discussions also and information we gave to you.
Speaker #1: And so coming now back to our results here to the existing business. So we completed first steps. But also, you can see here that we showed the numbers with numbers of our commercial online printing and excluding.
Speaker #1: Under accounting ruling, we are going ahead with reclassification under IFS 5. And take certain effects already out, but on the other hand, the cash came only in on the 2nd of July.
Speaker #1: So after finishing the year, the first half years, that's why Thomas mentioned that the effects will profitability point of view only be seen at the finish, the consolidation by the third quarter.
Speaker #1: So what can we conclude of our business of the Q2? We can see here a significant growth in our revenues which is, I would say, especially under these circumstances, that the German market is very difficult for a lot of e-commerce business.
Speaker #1: But we still see with this as a core market, we can also see here compared to the previous year, a significant growth of 6% excluding our commercial online business.
Speaker #1: So the EBIT is, from an operational perspective, comparable to what we have seen in the previous quarters, which is typical for our season. So a good and solid result on the one hand.
Speaker #1: On the other hand, we of course due to our activities of the first half year we spent some money for getting our strategic direction implemented.
Speaker #1: And this is not for free, of course. So the transaction costs you can see here will be loaded on our P&L as well. So we have to show these effects.
Speaker #1: But still, at a later stage, you will see that we stay with our with our predictions and plans. So we don't take these things away.
Speaker #1: We come later to that. So the. For Q2, solid operational-wise 3 million. And then corrected by transaction costs for the sale. And of course, also the transaction costs that we had to anticipate for getting the signing of our acquisition of Stardun.
Speaker #1: So a proportion of that amount will be compensated by the seller at a later stage. And so but still, we had to reflect this.
Speaker #1: So we that's why we have a reported EBIT of the Q2 of minus 7.4 million. So having the look on our first half year, in addition to all the activities we had, we can see a strong operational first half year.
Speaker #1: The first quarter was tougher than the second one. If you would ask our people, they would say, no, it was the other way around.
Speaker #1: Because we had really a lot of things here to prepare and get under control. I must say. So operational-wise, we are really satisfied. And also from a result point of view, we are not unhappy with our profitability which is, of course, under and we shared over the last months also market-wise, cost-wise, it's something where we have to be very focused.
Speaker #1: And concentrated on steering all our activities with higher logistic cost, higher material costs, all this is also falling into our field. So we have really to manage these circumstances.
Speaker #1: So we promised, and I mentioned it in the beginning, as long as you talk to these also to me, on these investor conferences, we were sharing that we are focusing on our photo finishing business.
Speaker #1: And I guess we not only took ourselves in the management from a management perspective a favor, also the team at our commercial online printing business, they have now, I guess, a haber where they can also develop and flourishing business in a way that they have their yeah, hometown found with Simplus.
Speaker #1: So that's why we can now focus on our photo finishing business, which will be strengthened by the addition of Kodak moments and we will have furthermore insights of that in the future while we are preparing the closing and then.
Speaker #1: The integration and really implementing the growth and I guess also for our the people at Kodak moments, it's maybe also a good move because we have a heart for pictures and photos.
Speaker #1: So operational performance, as I said, the turnover continued more than expected. And the result is on a typical seasonal level. So that's why we stay with the guidance for this quarter.
Speaker #1: So also the expected turnover growth and so we will, of course, have a closer look at the third at the third quarter. But it is expected to stay at the line what we have communicated.
Speaker #1: So 782 810 million and the EBIT will stay in the range as what we have communicated. So let's talk about a little bit more about photo finishing.
Speaker #1: And so I'm happy to announce that again, we have kicked off our international CV photo award. And which is the biggest on earth. And this year, we have decided to donate 10 cents to UNICEF.
Speaker #1: And so we are happy to and very curious to what we'll achieve our I would say, our I would say the these 5,000 our.
Speaker #1: The amounts of pictures and you know what we would see there. And yeah, pretty nice. And we are very curious. And then also, we are proudly present our new product, which was the winner of our internal innovation days.
Speaker #1: It's a cooperate it's developed together with Swarovski. And it shows here in the video, you can see that a lot of Swarovski crystals are at the surface of a picture.
Speaker #1: And creates a very sparkling moment, if you look at the picture. So it was, as I said, the winner of our innovational process. And we will be presented the wall art will be presented in 200 selected especially bigger stores of Swarovski.
Speaker #1: And also creates, of course, a higher visibility of our product. So coming back from this sparkling moment, coming back to the business segment, photo finishing itself here is underlining what I have said before.
Speaker #1: 7% increase in turnover alone in Q2. And usually that period is for taking pictures. And obviously, our customers were already on the way of creating photo books.
Speaker #1: You can see also here an increase of sold photo books by 1.5%. And also with the turnover increase of 3% and also the turnover per photo, we will see continued and very happy to see this.
Speaker #1: You know, we are always have in mind what is coming up with the season. And if we have good and strong year, we are happy to and looking forward for the season because usually this trend is not really changing.
Speaker #1: And looking at the EBIT, I explained a little bit 1.7 million 2. million the transaction costs for our acquisition. But overall, the operational results stays comparable to last year.
Speaker #1: And you know, the seasonal the seasonality of our business is significant. And this is a very typical second quarter for us. Yeah, here it comes to a conclusion of the first half year.
Speaker #1: So as we have a week of first quarter, you can see the turnover growth of 4.5%. And so all in all, it's not changing.
Speaker #1: The overall picture and it sums up what was said before. Photo finishing turnover per quarter here, you can see also visualized to what I have said before.
Speaker #1: A good growth in the turnover following the trend and we are happy to see that the growth is steadily going in the right in the absolutely in the right direction.
Speaker #1: And it's a little bit in the second quarter above the target range. EBIT-wise, also for us from an operational perspective, no surprise. And completely within the range and our expectations.
Speaker #1: Yeah, the number of prints and the turnover created by the photo finishing, you can see here also that we were over what we had planned.
Speaker #1: And the increase you can see here what's driving the turnover of photo finishing is not only the number but also the value of the photos, which is following to what we have seen, especially in the second half of last year.
Speaker #1: So very good. Yeah, summarizing here underlining the number of total prints increasing and also the value here you can also see a little bit the impact of the first quarter.
Speaker #1: So 4.5%, which we are happy about. Number of photo books, which is our core product. And especially we are happy about that the higher value of the photo books continues to increase.
Speaker #1: So and that is especially you know, from our discussions that we are having a high focus in making our photo books more attractive to customers, creating new features within the photo book, increasing the premierization of the products and reflection here in the numbers.
Speaker #1: Here summarized for the first half year. And last time in our presentation, we will talk yes, last time.
Speaker #2: Oh, very last time, yeah.
Speaker #1: We are going ahead and report a little bit about our commercial online spend. We. Which communicated the challenges of that business unit. And which is driven by the overall market decline and also where our I would say manufacturing part or technique and the qualification of our people obviously make is a success out of it.
Speaker #1: And this is still what we see what we see in the first half year. Combined the EBIT is a level where not really a something is really earned.
Speaker #1: But it's also from a turnover-wide turnover-wise the lose of business is not significant as they stay with the with the amount of business, which is already I would say an outstanding performance of team and technique in these declining markets.
Speaker #1: And this is and we wish and hope that for the second half year of that business so that they are keep going and also can take some positive effects out of the acquisition simplistic.
Speaker #1: Retail. You probably had a little bit of question mark because also Thomas mentioned so we are focusing also on retail business. So we are investing.
Speaker #1: We are developing our stores and also took the decision to have the portfolio in these stores more focused on higher margin photo products like frames or photo albums, which are closer to our core business.
Speaker #1: Also because of the hard hardware, the expensive cameras where we cannot compete with other suppliers. Like the Amazons and other specific suppliers for that.
Speaker #1: So we are reducing by that decision focusing on the range we are reducing a little bit the turnover EBIT perspective. If you go on the next page, for the first half year, you can see it's not too bad.
Speaker #1: And we are heading towards the break even. And hope that this decision for and it's really the retail business. And so that we are developing it from a margin perspective in the right direction.
Speaker #1: Yeah. It's like our other segment is it's very small. It's just a segment where we can put what is not really directly connected to our business.
Speaker #1: You can see it's we had a little bit higher profitability because of the improvement in the earnings. Coming out of the property lettings. So nothing more to be said on that.
Speaker #1: So let's lead me to the financial details. Having a view on the TNL here for the Q2, it's showing or translating what we have said before into numbers.
Speaker #1: So the increase of revenue, you can see but also you can see of course here the group-wide view on our custom packs. You have seen 3 million more material costs.
Speaker #1: You have seen the transaction costs and also we have hired a little bit more people for the photo finishing business. So also the increase of personal costs, you can see here.
Speaker #1: If we and we come later a little bit more to the effects on our cash flow. We have not only acquired something, we have not only sold something, we have also implemented S4, S4HANA.
Speaker #1: And so it was as you maybe all know, the last months before you go live, and we have big bang implementation. So we went live with all our businesses and all the countries at the same day.
Speaker #1: And we've got prepared for that. And so with the cutover planning and the migration, so also from an operational point of view, we have a little bit to fill our storages and making sure that we are up from an operational point of view are prepared for that.
Speaker #1: I can tell you we had a very smooth go-live and so we were all the time very curious to see what's going to happen.
Speaker #1: But not really big things happened. So all was fine. So all our plans went in the right direction. So the operational expenses are mainly driven by the advisory costs here.
Speaker #1: And I hire IT expenses, of course, also we took a bit more speed on getting the things done for the S4 implementation on the last mile.
Speaker #1: And so this is of course reflected in the cost basis. So if you have a look into our balance sheet, you can see that we have obviously something going on on our asset basis.
Speaker #1: And you remember that in the first quarter we property's in UK and Germany. And on the other hand, we sold the business and also the facility.
Speaker #1: And at Saxo Park, our Saxo Park, in Dresden. And so we did the reclassification under IFRS 5 because then you hold the assets for a short-term basis.
Speaker #1: And that's why you can see here the jump in the current assets compared to previous year. So that is reflected here. All in all, donations within the balance sheet are changing.
Speaker #1: On the liability side, you can see that the retained earnings and the balance sheet results, that's also the dividend payouts so also the shares we bought back.
Speaker #1: So in fact, you can see all in all the balance sheet sums stays at the same level. And whereas the equity ratio is increasing now to 71.2%.
Speaker #1: So as I said, the free cash flow is reduced to what's minus 18.3 million. And this is mainly driven due to the working capital effects we had.
Speaker #1: And payouts and so also to get prepared for paying earlier. And so the for any delays just in case we are not ready for with our new accounting system here.
Speaker #1: So that's why all in all, the cash flow from the operating activities look a bit different. Also we prepared you already in our last call that this is this is something what was planned.
Speaker #1: So no surprise for us. Also the cash flow from investing activities decreased by nearly 2 million. And it's mainly reflected more capital expenditures expenditures on property planned and equipment.
Speaker #1: And so all in all then the free cash flow is shrinking further. The return on capital employed last time diluted. And so it's still remains on a solid level.
Speaker #1: 16.5%. So these figures will be changed in the next upcoming times, I would say.
Speaker #2: Yes. Thank you very much, Sirka, for the quick run through our figures. And let's sum it up a little bit. We did dispose our commercial online productivities.
Speaker #2: We did acquire Kodak Moments. And we launched S4. All of that was happening in Q2. So as you said, it was a stressful Q2 for many of our people here.
Speaker #2: But we delivered good results operational as well, which is very important here. And yes, you did see some effects on the balance sheet, on the cash flow activities, also due to the S4 launch.
Speaker #2: Nothing to worry about. We are very confident about what we have seen in Q2. And I will tell you, we are confirming our outlook going forward as well.
Speaker #2: And to be honest, this story which we have here and many of you have followed us through many of these years, this will look even stronger if we are able then to really add the Kodak Moments business to that one.
Speaker #2: Usually we don't believe in hockey sticks, but it will have the form of a hockey stick a little bit if we add this 200 million turnover here.
Speaker #2: After closing our story continues and this very clearly our story will accelerate with this acquisition. Our story will accelerate and I think here and if we go on the next slide, as well, I mean, you don't even notice the disposal of the commercial online productivities, but I can tell you in a positive way, you will notice our acquisition of Kodak Moments on the revenue side as well as on the profit side.
Speaker #2: So we are confirming our 2026 outlook as of now. And this includes also that was too quick. And this includes also our targets in photos, in CV photo books, in operational investments, and so on.
Speaker #2: So we are strong about this business. We are strong about the acquisition. We are strong about CV. I think that's fair to say here.
Speaker #2: And yeah, just to remember if some of you might have forgotten and this was something we were hinting to, this is something we will post in Q3.
Speaker #2: Obviously, we will de-consolidate. I think that's the right technical term here. We will de-consolidate the commercial online print segment. You know that we did have, I mean, the cash is already here, but it's not you didn't see that on the free cash flow because it did arrive in July as we said there was the closing in July.
Speaker #2: And you will see the effect of the de-consolidation and it will be quite strong. We did communicate openly about this one and this is something you can be looking forward to in Q3.
Speaker #2: I think that's fair to say. So this being said, happy customers. I think we can stay a little bit on this chart here and you can say, well, this is just the chart.
Speaker #2: There's just the chart. No, this is in a nutshell, in a picture our strategy because we are really everything we do here now at CV in Oldenburg in all of our countries is geared towards end customers.
Speaker #2: That was not the case with commercial online print. So the whole company now is behind this picture. It was before our commercial online printing colleagues said, well, our customers are, I don't know, buying centers at larger corporations, for example, and so on and so on.
Speaker #2: So this is really what drives us. And if you had a look into our offices, you would see in some of the hallways already we have put up Christmas trees.
Speaker #2: Yes, you can say we are not and of course we are not, but with 35 degrees, tomorrow it's forecast to be 35 degrees here in Oldenburg.
Speaker #2: Our people have Christmas campaign. We need coming back from holidays, the school holidays, today is the first day with our school holidays. So those people have to prepare the Christmas campaigns.
Speaker #2: And we have to get them somehow in the mood. And one of these small little details we are putting up Christmas trees. So that these consumers and these customers will be happy and looking at their individualized photo products underneath the Christmas tree.
