LEM Holding SA · SIX:LEHN
LEM Holding SA — H1 2014/15 Earnings Presentation
38 slides from LEM Holding SA's earnings presentation, Nov 13, 2014
Slide 1: Results First half year 2014/15
Results First half year 2014/15 1 April 2014 to 30 September 2014 13 November 2014
Slide 2: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 2
Slide 3: Global Market Leader in Current and Voltage Transducers
1. Global Market Leader in Current and Voltage Transducers Market Position Performance Perspectives Source: Swissquote Global market share Continued sales Reinforced invest- of 50% in Industry growth and margin ment in innovation Benchmark in service improvements Solid growth perspec- and
Slide 4: LEM Applications: Robot
1. LEM Applications: Robot Industrial robots require movements in 3-6 axes in order to move the end of the arm in every position. Applications are accomplished with high endurance, speed and precision. The robot arm is moved by electrical motors: usually one motor for each axis. The power inverter (
Slide 5: LEM Applications: Formula 1 Energy Recovery System
1. LEM Applications: Formula 1 Energy Recovery System 2014 Formula 1 cars include a revised energy recovery system (ERS). Engine specifications impose a 440 kW turbocharged (2) engine 4 A HC5 FW 2 combined with an ERS (3, 4) providing 5 3 additional 120 kW for over 30 seconds per lap. 6 7 A 1 The ER
Slide 6: LEM Applications: Locomotive
1. LEM Applications: Locomotive Inverters (3) are used to transform the energy into the right voltage and current to drive the motors (4). Voltage and current transducers (A,B) are used to measure the current and the voltage on the secondary side of the A LTC 100 B DVL 1 transformer (2) and on the D
Slide 7: LEM Applications: Sewing Machine/Embroidery Machine
1. LEM Applications: Sewing Machine/Embroidery Machine 4 Full servo control allows for speed and precision 7 in industrial sewing/embroidery machines. Accuracy and speed of the table movements, as 3 well as the correct, accurate and regulated rotation speed of the main axis for the needles 5 are dir
Slide 8: Diverse Target Markets – Diversified Businesses
1. Diverse Target Markets – Diversified Businesses Share of sales Businesses H1 of 2014/15 Cyclicality Macro drivers Green Cars Consumer durables Technology adoption 14% Conventional Cars Fuel savings High precision Late cycle Infrastructure investments Traction Renewable energies Mid cycle Energy p
Slide 9: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 9
Slide 10: Highlights H1 of 2014/15: Strong EBIT Margin
2. Highlights H1 of 2014/15: Strong EBIT Margin In CHF millions, % H1 2014/15 H1 2014/15 vs. Q2 2014/15 vs. H1 2013/14 Q1 2014/15 Orders 126.6 +1.9% -4.4% Sales 131.5 +3.6% +2.2% EBIT 29.6 -2.1% +18.4% Net profit 21.5 -12.4% +0.4% ■ Effective strategy execution turning into tangible results ■ Sales
Slide 11: Product Launches H1 2014/15
2. Product Launches H1 2014/15 HO 150 NP Proprietary ASIC High performance, over-current detection Compact size Industry Low cost HO 250-P Proprietary ASIC High performance, over-current detection Replaces older products Industry HAH3 DR S02 3-phase transducer Improved performance
Slide 12: Net Sales
2. Net Sales In CHF millions In CHF millions, % 300 Sales H1 vs. H1 Q2 vs. 275 as at constant Q1 250 reported currencies Industry 113.6 +3.4% +6.8% +1.0% 225 Automotive 17.9 +5.0% +9.7% +9.8% 200 Total sales 131.5 +3.6% +7.2% +2.2% 175 150 ■ Sustained growth from Industry businesses; increased marke
Slide 13: Quarterly View
2. Quarterly View In CHF millions Book-to-bill ratio 80 1.2 Booking down by 4.4% Q2 vs. Q1 70 65.0 66.5 63.1 61.8 65.1 1.0 Seasonal low in 61.1 60 61.1 55.0 55.8 57.6 bookings 50 0.8 Customers’ requested lead times and stock 40 0.6 levels continue to trend downwards 30 0.4 20 0.2 10 0 0.0 Q1 Q
Slide 14: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets Europe In CHF millions, % Sales Growth Growth North America H1 vs. H1 Q2 vs. Q1 Asia and ROW Europe 48.6 +2.2% +5.7% 43% N. America 11.8 -17.0% +7.3% Asia and 53.1 +10.7% -4.3% RoW 47% Total 113.6 +3.4% +1.0% Growth and market share gains across most businesse
Slide 15: Industry Segment: Business Development
2. Industry Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 30 280 Drives & welding (growth H1 vs. H1: +1%) Sustained transfer of customers’ production to 25 240 Asia Weakening trend in Europe and North America 200 20 Renewable energies & power su
Slide 16: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets In CHF millions, % Europe Sales Growth Growth H1 vs. H1 Q2 vs. Q1 North America Asia and Rest of World Europe 1.2 -14.5% +17.5% 9% N. America 9.1 -2.2% +9.2% Asia and 7.7 +19.7% +9.1% RoW 38% Total 17.9 +5.0% +9.7% Focus on Asian and North American markets
Slide 17: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 40 25 Conventional cars (growth H1 vs. H1: +2%) Consistent battery management business 35 20 Some growth in USA, China and Japan 30 Green cars (HEV, EV) (+20%) Pick-up of activity wit
Slide 18: Business Development China
2. Business Development China Sales Production ■ Market share of over 50% ■ LEM China stabilizes its #1 position as largest manufacturing site of the Group ■ Most important market with 27% of (58% of total production, compared to total sales 56% in financial year 2013/14) ■ “Made by LEM” quality In
Slide 19: New Production Site in Sofia (Bulgaria)
2. New Production Site in Sofia (Bulgaria) Objectives of the new site Diversify LEM’s cost-competitive production Increase production capacity close to European customers Increase natural hedge of operations Absorb major part of LEM’s future growth Achievements Investment of CHF 2 mill
Slide 20: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 20
Slide 21: Financial Highlights H1 of 2014/15
3. Financial Highlights H1 of 2014/15 Strong balance sheet Dividend payment of CHF 45.6 million to shareholders in July 2014 Equity at CHF 73.8 million, equity ratio 52.7% (57.3% per 30.9.2013) Increase in net working capital of CHF 2.3 million (since 31.3.14) to prepare movement of producti
Slide 22: Balance Sheet Analysis
3. Balance Sheet Analysis In CHF millions 30.9.2014 31.3.2014 Net working capital 41.0 38.7 Fixed assets 38.4 37.8 Noncurrent liabilities -6.9 -6.9 Net operating assets 72.5 69.6 Net cash / (debt) 1.3 24.6 Equity 73.8 94.2 Equity ratio 52.7% 65.1% Days of sales outstanding 68 65 Days of inventory ou
Slide 23: Income Statement
3. Income Statement In CHF millions H1 H1 Change Q1 Q2 Change 2013/14 2014/15 2014/15 2014/15 Sales 126.9 131.5 +3.6% 65.0 66.5 +2.2% Gross margin 46.5% 46.3% -0.1pt 45.3% 47.4% +2.1pt Operating expense -28.7 -31.3 +9.0% -15.9 -15.4 -2.8% EBIT 30.2 29.6 -2.1% 13.6 16.0 +18.4% Net financial exp. -0.7
Slide 24: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 80 30% Sixth consecutive 65.1 70 66.5 quarter with EBIT 65.0 25% 63.1 61.1 61.8 61.1 margin above 20% 55.8 57.6 60 55.0 20% Positive volume 50 leverage effect on 15% margins 40 Q4 of 2012/13 included 10% 30 a restructuring charge of 5% CHF 1.
Slide 25: Gross Margin
3. Gross Margin In CHF millions In % of sales 140 48% H1 H1 Q1 Q2 2013/14 2014/15 2014/15 2014/15 47% 120 Gross margin 59.0 60.9 29.4 31.5 46% in CHF millions 100 45% Gross margin 46.5% 46.3% 45.3% 47.4% in % of sales 44% 80 43% Gross margin in line with last years' 60 42% margin, in accordance wi
Slide 26: Operating Expense
3. Operating Expense In CHF millions In % of sales 70 40% H1 H1 Q1 Q2 2013/14 2014/15 2013/14 2014/15 60 Operating expense 28.7 31.3 15.9 15.4 30% in CHF millions 50 Operating expense 22.7% 23.8% 24.4% 23.2% 40 in % of sales 20% 30 Higher administration expense driven by LEM Bulgaria development a
Slide 27: R&D Expense
3. R&D Expense In CHF millions In % of sales H1 H1 Q1 Q2 16 8% 2013/14 2014/15 2014/15 2014/15 14 R&D expense 7.3 7.4 3.9 3.5 in CHF millions 12 6% R&D expense 5.8% 5.6% 6.0% 5.3% 10 in % of sales 8 4% Maintained high investment in R&D for 6 both segments Ongoing renewal of product range with 4
Slide 28: EBIT
3. EBIT In CHF millions In % of sales H1 H1 Q1 Q2 60 26% 2013/14 2014/15 2014/15 2014/15 24% 50 EBIT 30.2 29.6 13.5 16.0 22% in CHF millions 20% EBIT 40 in % of sales 23.8% 22.5% 20.8% 24.1% 18% 30 16% Continued cost control and high gross 14% margins 20 12% Profitability above target range of 1
Slide 29: Financial Expense
3. Financial Expense In CHF millions H1 H1 Q1 Q2 2013/14 2014/15 2014/15 2014/15 Exchange effect* -0.7 -1.8 +0.1 -2.0 Other financial expense & -0.0 +0.0 +0.0 +0.0 income Total -0.7 -1.8 +0.1 -2.0 H1 2014/15 exchange effect mainly driven by hedge losses following appreciation of CNY and USD vs. CH
Slide 30: Income Taxes
3. Income Taxes H1 H1 2013/14 2014/15 Expected income tax rate 14.1% 19.7% Expected withholding tax rate 2.2% 2.6% Expected tax rate 16.3% 22.3% Other differences 0.4% 0.3% Effective tax rate 16.7% 22.6% Higher expected tax rate due to the decision to abandon the HNTE status in China (+3.2%-pts fo
Slide 31: Net Profit
3. Net Profit H1 H1 Q1 Q2 In CHF millions In % of sales 2013/14 2014/15 2013/14 2014/15 50 20% Net profit 24.5 21.5 10.7 10.8 in CHF millions 45 18% Net profit 19.3% 16.3% 16.5% 16.2% 40 in % of sales 16% 35 H1 2013/14 14% -0.7 30 -4.9 30.2 24.5 25 12% 20 EBIT Financial expense Income tax Net profit
Slide 32: Cash Flow Statement
3. Cash Flow Statement In CHF millions 2013/14 2014/15 Profit before taxes 29.5 27.8 Adjustment for noncash items and taxes paid -5.4 4.0 Cash flow from changes in net working capital -8.6 -6.6 Cash flow from operating activities 15.5 25.2 Cash flow from investing activities -4.6 -3.6 Free cash flow
Slide 33: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 33
Slide 34: Market Factors and Strategy
4. Market Factors and Strategy ■ We firmly believe in our strategic direction and the 4 drivers for our business remain unchanged ■ We will continue to capitalize on the drivers of LEM’s markets through pure play components company diversification across geographies and businesses 34
Slide 35: Executing Strategy
4. Executing Strategy Strategic priorities Achievements in H1 2014/15 Increase technology leadership ■ Reinforce multidisciplinary innovation team ■ Launched 3 new products ■ Increase number of product launches ■ Started development & ■ Constantly improve performance of products engineering team in
Slide 36: Outlook
4. Outlook ■ For H2 of 2014/15 we expect ■ Slowing activity in Industry segment due to seasonality in the solar business during the winter months, weaker Q3 due to fewer working days and slowing activity in Europe ■ Continuing sales growth in the Automotive segment due to start of production of new
Slide 37: Q&A
Q&A At the heart of power electronics
Slide 38: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 17 February 2015 Third quarter 2014/15 results 4 June 2015 Year-end 2014/15 results 25 June 2015 Ordinary Shareholders’ Meeting for the financial year 2014/15 30 June 2015 Dividend ex-date 2 July 2015 Dividend payment date For further informa