LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2012/13 Earnings Presentation
47 slides from LEM Holding SA's earnings presentation, Jun 5, 2013
Slide 1: Results Q4 of 2012/13 and Financial Year 2012/13
Results Q4 of 2012/13 and Financial Year 2012/13 Media & Analyst Conference Zurich, 5 June 2013
Slide 2: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Julius Renk 4. Strategy and Outlook François Gabella 5. Proposals Shareholders’ Meeting Felix Bagdasarjanz 2
Slide 3: About LEM
1. About LEM ■ LEM is the global market leader in providing innovative and high quality solutions for measuring electrical parameters. ■ The current and voltage transducers are used in a broad range of industry and automotive markets. ■ LEM is a high growth global company with 1’137 employees per 31
Slide 4: LEM Applications: Elevator
1. LEM Applications: Elevator 2 The controller moves the motor in the right 2 direction and lets it stop exactly at the right position to the floor ground, independent of 3 the weight in the elevator car. The current B transducers take care that the motor is A powered with the correct current. A LTS
Slide 5: LEM Applications: Start-Stop System for Cars
1. LEM Applications: Start-Stop System for Cars The current sensors (HAB, CAB) allow the battery management system to decide if enough energy is available in the battery to A CAB C HC5 D HAH3 operate the accessories (such as air- conditioning, headlights, and radio) while the engine is off, and stil
Slide 6: LEM Applications: Container Gantry Crane
1. LEM Applications: Container Gantry Crane A crane can be moved on rails over the ground surface normally driven by four motors. The trolley runs along rails that are located on top A LF 1005 or sides of the boom and girder. The movement is done with two motors located on the trolley. A 4 Once the
Slide 7: LEM Applications: Locomotive
1. LEM Applications: Locomotive Inverters are used to transform the energy into the right voltage and current to drive the motors. Voltage and current transducers are used to measure the current and the voltage on the secondary side of the transformer and A LTC 100 B DVL 1 on the DC-side. Special di
Slide 8: LEM Production & Logistics World-Wide
1. LEM Production & Logistics World-Wide Production Centers (PDCs) Adaptation Centers Sales Offices Agents / Distributors 8
Slide 9: LEM at a Glance - Businesses
1. LEM at a Glance - Businesses Industry segment Automotive segment Drives & welding Conventional cars ■ Motor drives ■ Lead battery management ■ Welding ■ Start-stop application ■ Miscellaneous Green cars (HEV, EV) Renewable energies & ■ Battery pack management power supplies ■ Electric motor contr
Slide 10: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Julius Renk 4. Strategy and Outlook François Gabella 5. Proposals Shareholders’ Meeting Felix Bagdasarjanz 10
Slide 11: Highlights 2012/13: Increased Margins with Stable Sales
2. Highlights 2012/13: Increased Margins with Stable Sales In CHF million, % 2012/13 2012/13 vs. 2011/12 Q4 vs. Q3 2012/13 Orders 230.6 +26.1% +14.3% Sales 235.0 -0.6% +1.4% Operational EBIT 41.0 +20.1% -37.9% Net earnings 32.6 +14.5% -51.6% ■ Second-best result in LEM’s history after record year 20
Slide 12: Net Sales
2. Net Sales In CHF millions In CHF million, % Sales YoY YoY QoQ 300 at constant currencies 275 Industry 200.0 -4.0% -6.6% +2.5% 250 Automotive 35.0 +24.8% +18.0% -4.5% 225 Total sales 235.0 -0.6% -3.7% +1.4% 200 175 ■ Industry business slowed down 150 ■ Strong performance of automotive 125 business
Slide 13: Quarterly View
2. Quarterly View In CHF millions Book‐to‐bill ratio 100 1.6 Recovery of bookings: 90 1.4 Q4 of 2012/13 with 80 77.0 77.4 book-to-bill ratio 1.05 75.0 67.7 1.2 Short lead times 70 66.8 63.1 61.1 55.0 requested by customers 1.0 60 57.9 55.0 55.7 55.8 Customer service 50 0.8 reached all-time hig
Slide 14: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets In CHF million, % Sales YoY QoQ Europe North America Asia and ROW Europe 95.2 -11.3% +17.2% N. America 28.5 +3.2% -8.2% 38% Asia and 76.3 +4.0% -9.7% ROW 48% Total 200.0 -4.0% +2.5% Slow growth in Asia and North America while Europe being slow China was #1 i
Slide 15: Industrial Segment: Business Development
2. Industrial Segment: Business Development Businesses and Applications In CHF millions Op. EBIT in % of sales 25 Drives & welding (growth YoY: -12%) 280 Weak markets, mainly in Europe Stabilization in Europe and North America in 240 20 H2 of 2012/13 200 Renewable energies & power supplies (+7%)
Slide 16: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets Europe In CHF million, % Sales YoY QoQ North America Asia and ROW 8% Europe 2.9 +9.2% +45.9% N. America 18.0 +24.5% -1.6% 40% Asia and 14.1 +28.9% -17.0% ROW Total 35.0 +24.8% -4.5% Strong sales growth YoY, third consecutive year with double-digit 51% growth
Slide 17: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 35 35 Conventional cars (growth YoY: +33%) World car demand resumed 30 30 Strong growth in battery management 25 25 application Increasing interest in start-stop- 20 20 application 15
Slide 18: Business Development China
2. Business Development China Sales Production ■ Market share of over 50% ■ LEM China expands its #1 position as largest manufacturing site of the Group ■ Sales impacted by slowing activity (50.8% of total production, compared to especially in solar, wind and traction 43.2% in 2011/12) ■ “Made by LE
Slide 19: LEM Perceived as the Global Leader in Providing Transducers
2. LEM Perceived as the Global Leader in Providing Transducers to Measure Electrical Parameters 2012 customer satisfaction survey conducted in all territories ■ LEM rated as high as in a 2009 study ■ LEM most valued for ■ Focus on customer demands and requests ■ Ease to work with ■ Trustworthiness ■
Slide 20: Product Launches 2012/13 (1/2)
2. Product Launches 2012/13 (1/2) CAB Digital bus output and embedded microcontroller Highest accuracy for battery monitoring application State of charge measurement for hybrid vehicles Automotive HAH3 DR Customer specific transducer Communication with microcontroller / serial interface
Slide 21: Product Launches 2012/13 (2/2)
2. Product Launches 2012/13 (2/2) HO New ASIC with twice improved accuracy New functionalities: over-current detection, stand-by mode Industry First programmable transducer DVL New technology to create a digital isolation Improved sensitivity to external magnetic fields Robust design for
Slide 22: New Production Plant in Sofia (Bulgaria)
2. New Production Plant in Sofia (Bulgaria) Objectives of the new site Diversify LEM’s low cost production Increase production capacity close to European customers Increase natural hedge of operations Absorb major part of LEM’s future growth Continuation of strategy initiated in 2004 P
Slide 23: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Julius Renk 4. Strategy and Outlook François Gabella 5. Proposals Shareholders’ Meeting Felix Bagdasarjanz 23
Slide 24: Consolidated Balance Sheet
3. Consolidated Balance Sheet In CHF thousands 31.3.2012 31.3.2013 Cash and cash equivalents 21’121 27’629 Accounts receivable 42’140 43’080 Inventories 26’605 23’619 Income tax receivables 2’009 1’264 Other current assets 2’956 3’250 Total non-current assets 37’683 41’026 Total assets 132’514 139’8
Slide 25: Income Statement
3. Income Statement Q3 Q4 In CHF thousands,% 2011/12 2012/13 Change Change 2012/13 2012/13 Sales 236’634 234’953 -0.6% 54’989 55’770 +1.4% Gross margin 39.1% 42.0% +2.9%pt 44.3% 37.6% -6.7%pt Operating costs -58’128 -57’608 -0.9% -13’742 -14’392 +4.7% Operational EBIT 34’171 41’036 +20.1% 10’618 6’5
Slide 26: Change in Classifications on Income Statement
3. Change in Classifications on Income Statement Operation Management Total In CHF thousands Facility cost support compensation impact cost Sales 0 Cost of goods sold -1'649 -1'295 -1'243 -4'187 Gross margin -4'187 Sales expense -1'401 -229 159 -1'471 Administration expense 3'650 1'395 1'050 6'096 R
Slide 27: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 100 30% Margins in Q4 of 90 77.0 77.4 2012/13 affected by 75.0 25% 80 restructuring charges 67.7 66.8 due to relocation of 20% 70 57.9 63.1 61.1 production to Bulgaria 60 55.0 55.8 55.0 55.8 15% 50 10% 40 30 5% 20 0% 10 0 -5% Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 28: Gross Margin
3. Gross Margin Q3 Q4 In CHF millions In % of sales 2011/12 2012/13 2012/13 2012/13 135 Gross 92.3 98.6 24.4 21.0 45% margin in CHF million 120 Gross 39.1% 42.0% 44.3% 37.6% 105 43% margin in % of sales 90 41% Positive impacts on gross margin 75 Continued operating savings in COGS 60 Continued
Slide 29: Operating Expense
3. Operating Expense In CHF millions In % of sales Q3 Q4 2011/12 2012/13 70 30% 2012/13 2012/13 Operating 60 expense 58.1 57.6 13.7 14.4 25% in CHF million Operating 50 expense 24.6% 24.5% 25.0% 25.8% 20% in % of sales 40 15% ■ Ongoing strict cost control measures 30 ■ Operating expense as a percent
Slide 30: R&D Expense
3. R&D Expense In CHF millions In % of sales Q3 Q4 2011/12 2012/13 2012/13 2012/13 15 8% R&D expense 13.4 14.7 3.8 3.9 in CHF million 12 6% R&D expense 5.7% 6.2% 6.9% 7.1% in % of sales 9 Increased investment in R&D for both 4% segments 6 R&D expense above the long-term average of 5.5% 2% Rene
Slide 31: Operational EBIT
3. Operational EBIT Q3 Q4 In CHF millions In % of sales 2011/12 2012/13 2012/13 2012/13 70 22% Operational EBIT 34.2 41.0 10.6 6.6 60 in CHF million 20% Operational 50 EBIT 14.5% 17.5% 19.3% 11.8% 18% in % of sales 40 Profitability within target range 16% of 15 to 20% 30 Q4 of 2012/13 operationa
Slide 32: Legacy SOP Programs Expired per 31.03.2012
3. Legacy SOP Programs Expired per 31.03.2012 ■ With the closing of fiscal year 2011/12, all legacy stock option plans are closed ■ LEM will not record any additional stock option plan cost/income going forward ■ LEM has no further option based compensation programs ■ In financial year 2013/14, LEM
Slide 33: Financial Expense
3. Financial Expense In CHF thousands Q3 Q4 2011/12 2012/13 2012/13 2012/13 Exchange effect* -1’704 -1’484 -954 -1’253 Other financial expense & -258 -5 6 -4 income Total -1’962 -1’489 -948 -1’257 2012/13 exchange effect mainly driven by depreciation of CHF vs USD, CNY and JPY Foreign exchange h
Slide 34: Income Taxes
3. Income Taxes FY FY 2011/12 2012/13 Expected income tax rate 16.5% 15.5% Expected withholding tax rate 1.3% 2.3% Expected tax rate 17.8% 17.8% Expense not deductible for tax purposes 1.8% 0.0% Permanent differences 1.1% 0.2% Effect of changes in tax rates on deferred tax -2.7% 0.1% Adjustment in r
Slide 35: Net Profit
3. Net Profit Q3 Q4 CHF millions % of sales 2011/12 2012/13 2012/13 2012/13 45 16% Net profit 28.5 32.6 8.1 3.9 in CHF million 40 Net profit 12.1% 13.9% 14.8% 7.1% in % of sales 14% 35 0.3 - 2.0 - 4.0 2011/12 30 12% 34.2 28.5 25 10% Operational EBIT SOP inc./cost Financial Income tax Net profit 20 e
Slide 36: Cash Flow Statement
3. Cash Flow Statement In CHF thousands 2011/12 2012/13 Profit before taxes 32’524 39’547 Non-cash items 2’892 3’561 Cash flow from changes in net working capital 11’238 3’083 Cash flow from operating activities 46’654 46’191 Cash flow from investing activities -9’120 -10’410 Free cash flow 37’534 3
Slide 37: Financial Highlights in 2012/13 - Summary
3. Financial Highlights in 2012/13 - Summary Strong balance sheet Equity ratio 62.4% (60.0%) Net financial assets CHF 27.6 million (CHF 18.1 million) No interest bearing financial liabilities Profitability within target range Increased investment in R&D Stable operating expense Improved
Slide 38: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Julius Renk 4. Strategy and Outlook François Gabella 5. Proposals Shareholders’ Meeting Felix Bagdasarjanz 38
Slide 39: 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 markets 39
Slide 40: Strategic Initiatives to Extend Leadership Position
4. Strategic Initiatives to Extend Leadership Position Key strategic initiative Achievements 2012/13 Increase technology leadership ■ Reinforce multidisciplinary innovation team ■ Increased investment in R&D ■ Increase number of product launches ■ Launched 8 new products, ■ Constantly improve perfor
Slide 41: Outlook
4. Outlook ■ Economic climate expected to remain volatile ■ For 2013/14 we expect ■ Industry segment: progressive restart of sales in North America and Asia, Europe to remain weak ■ Automotive segment: continued growth ■ Further implementation of key strategic initiatives ■ Operating margins to rema
Slide 42: Agenda
Agenda 1. LEM at a Glance François Gabella 2. Highlights and Business Review François Gabella 3. Financial Review Julius Renk 4. Strategy and Outlook François Gabella 5. Proposals Shareholders’ Meeting Felix Bagdasarjanz 42
Slide 43: Dividend Proposal
5. Dividend Proposal LEM Dividend History ■ High trust in the company’s capability to generate strong 40 cash flows ■ Ordinary dividend of CHF 30 30** per share 25 ■ Payment corresponds to a payout ratio of 105% 20 10 2008/09 2009/10 2010/11* 2011/12 2012/13 43 * Including CHF 10 from early terminat
Slide 44: Changes in the Board of Directors
5. Changes in the Board of Directors ■ Felix Bagdasarjanz, member of the Board of Directors of LEM Holding SA since 2002 and Chairman since 2004, announced resignation ■ Anton Lauber, member of the Board of Directors since 2004, will not stand for re-election ■ Andreas Hürlimann to be nominated as n
Slide 45: Designated New Chairman
5. Designated New Chairman Andreas Hürlimann (M. Sc. Electrical Engineering) ■ Independent board professional and entrepreneur ■ Board member of LEM since 2011 ■ Managing Director at Spencer Stuart in Zurich from 2005 to 2010 ■ Global Director of Industry Practices and a member of the Executive Boar
Slide 46: Proposed New Board Member
5. Proposed New Board Member Dr. Norbert Hess (Dr.-Ing. TU Berlin) ■ German national ■ 25 years engineering and management career with Siemens AG and EPCOS AG ■ Member of the Executive Committee and Chief Operations Officer at EPCOS AG ■ Breadth of professional experience in material & technology, o
Slide 47: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 27 June 2013 Ordinary shareholders’ meeting for the year 2012/13 2 July 2013 Dividend ex-date 5 July 2013 Dividend payment date 7 August 2013 First quarter results of 2013/14 13 November 2013 Half-year results of 2013/14 18 February 2014 Thir