LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2015/16 Earnings Presentation
43 slides from LEM Holding SA's earnings presentation, Jun 9, 2016
Slide 1: Results Q4 of 2015/16, Financial Year 2015/16
Results Q4 of 2015/16 Financial Year 2015/16 Media and Analyst Conference Zurich, 9 June 2016
Slide 2: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Andrea Borla 4. Strategy and Outlook François Gabella 5. Proposals to Shareholders Meeting Andreas Hürlimann HAH3 2
Slide 3: Global Market Leader in Current and Voltage Transducers
1. Global Market Leader in Current and Voltage Transducers Market Position Performance Perspectives LEHN SMI Source: Swissquote Global market share Market capitalization Reinforced invest- of 50+% in Industry of CHF 1 billion ment in innovation Benchmark in service Dividend yield >4% in
Slide 4: LEM Applications: Point machine
1. LEM Applications: Point machine In the earliest times, simple levers operated railway points manually. Gradually the points came to be operated by centralized levers in A PCM 10-P stations (4) and point machines. Point machines (2) have an electric motor and gears to convert the rotating motion o
Slide 5: LEM Applications: Hybrid-electric vehicles / electric vehicles
1. LEM Applications: Hybrid-electric vehicles / electric vehicles 1 High voltage battery A DHAB V2 Battery management 2 Charger The battery management system (BMS) 3 Motor controller adjusts the charging process through the 4 Electric motor and transaxle D CAB500 combustion engine in a hybrid-electr
Slide 6: LEM Applications: Magnetic Resonance Imaging (MRI)
1. LEM Applications: Magnetic Resonance Imaging (MRI) A ITL 900-T MRI scanners use strong magnetic fields, radio waves, and field gradients to form images of the body. The specific magnetic field is generated by 3 gradient amplifiers 2 (x,y,z) (4) that enhance the current to supply the gradient coil
Slide 7: LEM Applications: MV/LV substation
1. LEM Applications: MV/LV substation High voltage (HV) is adapted twice along its A ART way to consumers in order to simplify its A transmission and also in order to supply applications with the right levels of voltage. The last adaptation is realized inside a MV/LV substation adapting the voltage
Slide 8: Diverse Target Markets – Diversified Businesses
1. Diverse Target Markets – Diversified Businesses Share of sales Businesses 2015/16 Cyclicality Macro drivers Green Cars Consumer durables Technology adoption (electrification) 18% Conventional Cars Fuel savings High precision Late cycle Infrastructure investments Traction Renewable energies Mid cy
Slide 9: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Andrea Borla 4. Strategy and Outlook François Gabella 5. Proposals Shareholders Meeting Andreas Hürlimann LF2010 9
Slide 10: Highlights: Stable Performance
2. Highlights : Stable Performance In CHF millions, % 2015/16 2015/16 vs. Q4 2015/16 vs. 2014/15 Q4 2014/15 Orders 256.5 +2.2% +2.8% Sales 261.5 +1.4% +1.9% EBIT 52.9 -2.4% +19.0% Net profit 43.5 +0.8% +20.2% ■ Maintained strong margins and net profit despite challenging market and currency conditio
Slide 11: Product Launches 2015/16 (1/2)
2. Product Launches 2015/16 (1/2) LF 2010 Proprietary ASIC for closed loop Hall Effect technology High performance, matching fluxgate performance High immunity against surrounding perturbations Industry For drives, renewable energies and traction applications HOY / HOYA High precision meas
Slide 12: Product Launches 2015/16 (2/2)
2. Product Launches 2015/16 (2/2) ATO family Split core transducer with 600 V isolation Can be retrofitted For energy meters in power distribution and Industry smart grid applications HSN Integrated busbar Measures currents of up to 1000 A Reduced sensor size allows compact system design
Slide 13: Net Sales
2. Net Sales In CHF millions In CHF millions, % Sales YoY Q4 vs. 300 as at constant Q4 275 reported currencies 250 Industry 215.2 -2.7% +0.3% -1.6% 225 Automotive 46.3 +26.1% +23.6% +20.2% 200 Total sales 261.5 +1.4% +3.6% +1.9% 175 ■ Stable Industry business and strong growth 150 in Automotive busi
Slide 14: Quarterly View
2. Quarterly View In CHF millions Book-to-bill ratio 80 1.2 Market uncertainties and shrinking inventories at 70 1.0 customers translating 60 into shorter term bookings 0.8 50 Currency impact on sales and bookings 40 0.6 Seasonality due to 30 increasing share of 0.4 business in China and 20 in
Slide 15: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets In CHF millions, % Sales Growth Growth Q4 Europe YoY vs. Q4 North America Europe 87.8 -7.2% -1.7% Asia and ROW 41% N. America 24.2 -2.6% -10.2% Asia and 103.1 +1.6% +1.2% ROW 48% Total 215.2 -2.7% -1.6% Stable sales development in constant currencies (+0.3%)
Slide 16: Industry Segment: Business Development
2. Industry Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 240 25 Drives & welding (growth YoY: -6%) Robust business in China 200 Other regions soft due to weak industrial activity 20 Overcapacities exert pressure on prices 160 Renewable energi
Slide 17: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets In CHF millions, % Sales Growth Growth Q4 Europe YoY vs. Q4 North America 8% Europe 3.6 +22.2% +5.3% Asia and ROW N. America 20.4 +14.2% +3.6% Asia and 22.4 +40.1% +42.4% ROW Total 46.3 +26.1% +20.2% 48% Strongest performance in China 44% (sales growth +55%)
Slide 18: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 50 25 45 Conventional cars (YoY: +11%) Growth in line with market; stable market 40 20 share High demand due to strong growth of US and 35 Chinese car markets Won new projects and pla
Slide 19: 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 31% of (64% of total production, compared to total sales 58% in financial year 2014/15) ■ “Made by LEM” quality In
Slide 20: Business Development Sofia (Bulgaria)
2. Business Development Sofia (Bulgaria) Production 14 production lines relocated from Japan and Switzerland to Bulgaria (+6 in 2015/16) Headcount at 171 FTE Introduced a local development team to support production In CHF millions 25 Objectives of the site 20 +130% Diversify LEM’s cost-comp
Slide 21: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Andrea Borla 4. Strategy and Outlook François Gabella 5. Proposals to Shareholders Meeting Andreas Hürlimann HLSR 21
Slide 22: Financial Highlights
3. Financial Highlights Robust profitability Gross margin of 46.0% EBIT margin of 20.2% CHF 3.2 million negative impact on EBIT due to foreign exchange Net profit CHF 43.5 million Operating expenses at long term average in second half year Free cash flow of CHF 39.0 million Strong ba
Slide 23: Balance Sheet Analysis
3. Balance Sheet Analysis In CHF millions 31.3.2015 31.3.2016 Net working capital 37.9 42.3 Fixed assets 39.9 39.4 Noncurrent liabilities -6.8 -9.4 Net operating assets 71.0 72.3 Net cash / (debt) 20.9 13.6 Equity 91.9 85.9 Equity ratio 65.0% 61.3% Days of sales outstanding 66 69 Days of inventory o
Slide 24: Income Statement
3. Income Statement In CHF millions Q4 Q4 2014/15 2015/16 Change Change 2014/15 2015/16 Sales 257.8 261.5 +1.4% 61.5 62.7 +1.9% Gross margin 45.9% 46.0% +0.1pt 44.8% 45.5% +0.8pt Operating expense -64.2 -67.5 +5.1% -17.2 -16.3 -5.4% EBIT 54.2 52.9 -2.4% 10.3 12.3 +19.0% Net financial exp. -2.7 0.7 +
Slide 25: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 80 24.1% 25% Margin improvements in 23.5% 22.1% 2015/16 after weak Q1 70 20.8% 20.5% 19.6% CHF 3.2 million 20% negative foreign 60 17.1% 16.8% 19.1% exchange impact on 18.0% 50 16.5% 17.4% EBIT for financial year 16.2% 16.2% 15% 14.4% 15.6% 201
Slide 26: Gross Margin
3. Gross Margin In CHF millions In % of sales Q4 Q4 140 48% 2014/15 2015/16 2014/15 2015/16 47% Gross margin 118.4 120.4 27.5 28.6 120 in CHF millions 46% 100 Gross margin 45.9% 46.0% 44.8% 45.5% 45% in % of sales 44% 80 43% Negative impact on gross margin due to 60 adverse foreign exchange develo
Slide 27: SG&A
3. SG&A In CHF millions In % of sales Q4 Q4 60 25% 2014/15 2015/16 2014/15 2015/16 SG&A 48.8 52.9 13.0 12.6 50 in CHF millions 20% SG&A 19.0% 20.2% 21.1% 20.0% 40 in % of sales 15% 30 Higher sales and administration expense due to recruitment in Beijing and Sofia 10% 20 One-off cost in H1 of 201
Slide 28: R&D Expense
3. R&D Expense In CHF millions In % of sales Q4 Q4 2014/15 2015/16 15 7% 2014/15 2015/16 R&D 6% expense 15.3 14.6 4.3 3.7 12 in CHF millions 5% R&D expense 6.0% 5.6% 6.9% 5.9% in % of sales 9 4% Continued investment in R&D for both 6 3% segments Ongoing renewal of product range with 2% focus on
Slide 29: EBIT
3. EBIT In CHF millions In % of sales Q4 Q4 60 25% 2014/15 2015/16 2014/15 2015/16 EBIT 54.2 52.9 10.3 12.3 50 in CHF millions 20% EBIT 21.0% 20.2% 16.8% 19.6% 40 in % of sales 15% 30 Operational profitability maintained 10% Adverse foreign exchange impact; easing in 20 the course of 2015/16 O
Slide 30: Financial Expense
3. Financial Expense In CHF millions Q4 Q4 2014/15 2015/16 2014/15 2015/16 Exchange effect* -2.6 +1.0 +0.6 +1.6 Other financial expense & -0.1 -0.2 -0.0 -0.0 income Total -2.7 +0.7 +0.5 +1.6 Exchange effect in financial year 2015/16 mainly driven by appreciation of the EUR vs. CHF Foreign exchan
Slide 31: Income Taxes
3. Income Taxes 2014/15 2015/16 Expected income tax rate 17.6% 17.8% Expected withholding tax rate 0.8% 1.6% Expected tax rate 18.4% 19.3% Permanent differences 0.5% 0.3% Effect of changes in tax rates on deferred tax -2.4% 0.1% Adjustment in respect of previous period’s income tax -0.4% -1.0% Other
Slide 32: Net Profit
3. Net Profit Q4 Q4 In CHF millions In % of sales 2014/15 2015/16 2014/15 2015/16 50 20% Net profit 43.1 43.5 10.0 12.0 in CHF millions 45 18% Net profit 16.7% 16.6% 16.2% 19.1% 40 in % of sales 16% 35 2014/15 -2.7 14% -8.4 30 54.2 43.1 25 12% 20 EBIT Financial expense Income tax Net profit 10% 15 +
Slide 33: Cash Flow Statement
3. Cash Flow Statement In CHF millions 2014/15 2015/16 Profit before taxes 51.5 53.7 Adjustment for noncash items and taxes paid 3.7 -7.8 Cash flow from changes in net working capital -5.0 -0.2 Cash flow from operating activities 50.2 45.6 Cash flow from investing activities -9.7 -6.6 Free cash flow
Slide 34: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Andrea Borla 4. Strategy and Outlook François Gabella 5. Proposals to Shareholders Meeting Andreas Hürlimann ATO 34
Slide 35: 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 35
Slide 36: Executing Strategy
4. Executing Strategy Strategic priorities Achievements in 2015/16 Increase technology leadership ■ Reinforce multidisciplinary innovation team ■ Launched high number of new products ■ Increase number of product launches ■ Co-developments with customers ■ Constantly improve performance of ■ New tech
Slide 37: New Leadership since 1 January 2016
4. New Leadership since 1 January 2016 François Gabella CEO Rainer Bos Frank Rehfeld Andrea Borla General Manager General Manager CFO Automotive Industry - Sales & Marketing - Sales & Marketing - Finance - Business development - Business development - Legal - R&D - R&D - IT - Operations - Operations
Slide 38: Outlook
4. Outlook ■ For 2016/17 we expect ■ Stable economic situation ■ Steady sales in most markets ■ Growth in China to continue, though at a slower pace ■ Growth drivers: green cars and renewable energies businesses ■ Unstable currency environment and price pressure to remain challenging ■ 15% to 20% EB
Slide 39: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Andrea Borla 4. Strategy and Outlook François Gabella 5. Proposals to Shareholders Meeting Andreas Hürlimann ITL 1200-T 39
Slide 40: Dividend Proposal
5. Dividend Proposal ■ Dividend policy of distributing 40 40 38.2 significantly more than 50% of 40.1 37.9 35* consolidated net profit to 30 shareholders ■ Ordinary dividend of CHF 35 per 25 28.5 25.1 share proposed ■ Payment corresponds to a payout ratio of 91.7% ■ Sign of trust in the Company’s fu
Slide 41: Q&A: At the heart of power electronics
O&A At the heart of power electronics
Slide 42: Shareholder structure as at 31 March 2016
Shareholder structure as at 31 March 2016 Other 32.3% Werner O. Weber and Ueli Wampfler** 46.3% LEM Board and Management* 0.2% Sarasin Investmentfonds AG 3.8% Montanaro Asset * Excludes shareholdings of Ueli Wampfler Management Ruth Wertheimer / 7- ** Opting out clause introduced in LEM’s articles 5
Slide 43: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar The financial year runs from 1 April to 31 March 30 June 2016 Ordinary General Meeting of Shareholders for the year 2015/16 5 July 2016 Dividend ex-date 7 July 2016 Dividend payment date 11 August 2016 First quarter results 2016/17 10 Novembe