LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2014/15 Earnings Presentation
46 slides from LEM Holding SA's earnings presentation, Jun 4, 2015
Slide 1: Results Q4 of 2014/15, Financial Year 2014/15
Results Q4 of 2014/15 Financial Year 2014/15 Media and Analyst Conference Zurich, 4 June 2015
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 to Shareholders Meeting Andreas Hürlimann HO xx-P 2
Slide 3: Global Market Leader in Current and Voltage Transducers
1. Global Market Leader in Current and Voltage Transducers Market Position Performance Perspectives 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 product quality D
Slide 4: LEM Applications: Air Conditioner
1. LEM Applications: Air Conditioner In central air conditioning (1) (and increasingly residential system (2)), the air is cooled by blowing it over an evaporator filled with a refrigerant. Then the refrigerant is pumped B HO xxx-S into a condenser where it releases the heat. A B 1 pump or compresso
Slide 5: LEM Applications: Electric Motorcycle
1. LEM Applications: Electric Motorcycle The direct-drive power train of an electric motorcycle is highly efficient and maintenance-free, but requires a highly accurate torque control. A HAH1 DR The electricity is stored in a rechargeable 1 Direct-drive brushless motor lithium-ion battery (4), which
Slide 6: LEM Applications: Power Generator
1. LEM Applications: Power Generator The diesel driven engine (1) activates an alternator (2), which converts mechanical energy into electricity. The electricity is 1 Motor conducted to the network and measured at 2 Alternator the output of the alternator through the RT A RT 2000 Rogowski coil, whic
Slide 7: LEM Applications: Super Charger Station for Electric Vehicles
1. LEM Applications: Super Charger Station for Electric Vehicles A super charger (1) operates using several 400V DC chargers in parallel. 1MW would be required from the grid (5) if 10 cars were charged simultaneously. Charging stations therefore often include a photovoltaic plant A HO 250-P with sol
Slide 8: Diverse Target Markets – Diversified Businesses
1. Diverse Target Markets – Diversified Businesses Share of sales Businesses 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 prices,
Slide 9: 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 Andreas Hürlimann DAHBV2 9
Slide 10: Highlights: Sales Growth and High Margins
2. Highlights : Sales Growth and High Margins In CHF millions, % 2014/15 2014/15 vs. Q4 2014/15 vs. 2013/14 Q3 2014/15 Orders 251.0 +1.9% -4.9% Sales 257.8 +4.9% -4.9% EBIT 54.2 -2.7% -27.7% Net profit 43.1 -5.5% -14.3% ■ Appreciation of Swiss franc versus euro adversely affected Q4 results ■ Market
Slide 11: Product Launches 2014/15 (1/2)
2. Product Launches 2014/15 (1/2) HO xxx-S Three new products in the HO xxx-S family Proprietary ASIC with twice improved accuracy High performance, over-current detection Compact size for panel mounting Industry “Chameleon” allows three interchangeable mounting ways HOI Customer specifi
Slide 12: Product Launches 2014/15 (2/2)
2. Product Launches 2014/15 (2/2) IT xx5 Variety of models to cover 60A to 600A nominal High accurate fluxgate closed loop technology Exceptional accuracy expressed in ppm over the Industry temperature range Wide operating temperature range HAH3 DR S03 Compact 3-phase transducer Improved
Slide 13: LEM Perceived as the Global Leader in Providing Transducers
2. LEM Perceived as the Global Leader in Providing Transducers to Measure Electrical Parameters 2014 customer satisfaction survey conducted in all territories What our customers say: ■ Quality of LEM products rated even higher than in 2012 ■ Positive perception of LEM products in terms of reliabilit
Slide 14: Employees are strongly committed to the company and proud to work for LEM
2. Employees are strongly committed to the company and proud to work for LEM 2014 global employee engagement survey conducted What our employees say: ■ LEM is more customer focused and much more able to meet customers’ needs than in 2012 ■ LEM is more efficient and result driven ■ Highest engagement
Slide 15: Net Sales
2. Net Sales In CHF millions In CHF millions, % Sales YoY Q4 vs. 300 Q3 as at constant 275 reported currencies 250 Industry 221.0 +4.7% +6.7% -7.9% 225 Automotive 36.7 +6.2% +6.4% +14.2% 200 Total sales 257.8 +4.9% +6.7% -4.9% 175 ■ Sustained growth from Industry businesses; 150 increased market sha
Slide 16: Quarterly View
2. Quarterly View In CHF millions Book-to-bill ratio 80.0 1.2 Booking down by 4.9% 64.71 Q4 vs. Q3 70.0 65.1 65.0 66.5 63.1 61.8 1.0 Currency impact in Q4 61.1 61.5 60.0 61.1 55.0 55.8 57.6 Book-to-bill ratio stable 0.8 at around 1 50.0 Customers’ requested 40.0 0.6 lead times and stock leve
Slide 17: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets In CHF millions, % Europe Sales Growth Growth Q4 YoY vs. Q3 North America Asia and ROW Europe 94.6 +0.2% +0.6% N. America 24.9 -8.1% +13.3% Asia and 101.6 +13.3% -19.9% RoW 43% Total 221.0 +4.7% -7.9% 46% Growth and market share gains across most businesses
Slide 18: Industry Segment: Business Development
2. Industry Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 280 25 Drives & welding (growth YoY: +1%) 240 Transfer of customers’ production to Asia 20 Weakening trend in Europe and North America Positive performance in Asia 200 Renewable energie
Slide 19: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets In CHF millions, % Europe Sales Growth Growth Q4 North America YoY vs. Q3 Asia and Rest of World Europe 2.9 -2.7% +48.9% 8% N. America 17.8 -1.0% +18.6% Asia and 16.0 +17.7% +4.1% RoW 44% Total 36.7 +6.2% +14.2% Focus on Asian and North American markets Ro
Slide 20: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 40 25 Conventional cars (YoY: +4%) 35 Consistent battery management business 20 New customers and new platforms with 30 existing customers New start/stop application for niche markets
Slide 21: 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 26% of (58% of total production, compared to total sales 57% in financial year 2013/14) ■ “Made by LEM” quality In
Slide 22: 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 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 to Shareholders Meeting Andreas Hürlimann LA 130/150-P 23
Slide 24: Financial Highlights
3. Financial Highlights Robust profitability Gross margin of 45.9% EBIT margin of 21.0% CHF 2 million negative impact on EBIT due to foreign exchange developments in Q4 of 2014/15 Net profit CHF 43.1 million Low tax rate of 16.3%, due to one-off effects Strong balance sheet with equity
Slide 25: Balance Sheet Analysis
3. Balance Sheet Analysis In CHF millions 31.3.2014 31.3.2015 Net working capital 38.7 37.9 Fixed assets 37.8 39.9 Noncurrent liabilities -6.9 -6.8 Net operating assets 69.6 71.0 Net cash / (debt) 24.6 20.9 Equity 94.2 91.9 Equity ratio 65.1% 65.0% Days of sales outstanding 65 66 Days of inventory o
Slide 26: Income Statement
3. Income Statement In CHF millions Q3 Q4 2013/14 2014/15 Change Change 2014/15 2014/15 Sales 245.6 257.8 +4.9% 64.7 61.5 -4.9% Gross margin 47.0% 45.9% -1.1pt 46.2% 44.8% -1.5pt Operating expense -59.6 -64.2 +7.6% -15.6 -17.2 +10.1% EBIT 55.7 54.2 -2.7% 14.3 10.3 -27.7% Net financial exp. -1.4 -2.7
Slide 27: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 80 30% Q4 vs. Q3 sales down by CHF 3.2 million 65.1 70 63.1 61.8 65.0 66.5 64.7 25% CHF 2 million foreign 61.1 61.5 61.1 60 55.8 57.6 exchange impact on 55.0 20% EBIT margin in Q4 of 50 2014/15 40 15% Q4 of 2012/13 included a restructuring ch
Slide 28: Gross Margin
3. Gross Margin In CHF millions In % of sales Q3 Q4 2013/14 2014/15 140 48% 2014/15 2014/15 47% Gross margin 115.4 118.4 29.9 27.5 120 in CHF millions 46% 100 Gross margin 47.0% 45.9% 46.2% 44.8% 45% in % of sales 44% 80 43% Adverse foreign exchange impact on gross 60 margin in Q4 42% Positive i
Slide 29: Operating Expense
3. Operating Expense In CHF millions In % of sales 70 30% Q3 Q4 2013/14 2014/15 2013/14 2014/15 60 Operating 25% 59.6 64.2 15.6 17.2 expense in CHF millions 50 Operating 20% expense 24.3% 24.9% 24.2% 28.0% in % of sales 40 15% Higher administration expense driven by 30 IT and strategy consultanc
Slide 30: R&D Expense
3. R&D Expense In CHF millions In % of sales Q3 Q4 8% 2013/14 2014/15 2014/15 2014/15 15 7% R&D expense 14.4 15.3 3.7 4.3 in CHF millions 12 6% R&D expense 5.9% 6.0% 5.7% 6.9% 5% in % of sales 9 4% Maintained high investment in R&D for both segments 6 3% Ongoing renewal of product range with 2%
Slide 31: EBIT
3. EBIT In CHF millions In % of sales Q3 Q4 60 25% 2013/14 2014/15 2014/15 2014/15 50 EBIT 55.7 54.2 14.3 10.3 20% in CHF millions 40 EBIT 22.7% 21.0% 22.1% 16.8% in % of sales 15% 30 High operational profitability maintained 10% Continued cost control and high gross 20 margins Adverse foreign
Slide 32: Financial Expense
3. Financial Expense In CHF millions Q3 Q4 2013/14 2014/15 2014/15 2014/15 Exchange effect* -1.4 -2.6 -1.3 +0.6 Other financial expense & +0.0 -0.1 -0.1 -0.0 income Total -1.4 -2.7 -1.4 +0.5 2014/15 exchange effect mainly driven by EUR, JPY and RUB devaluation; partially compensated by gains on US
Slide 33: Income Taxes
3. Income Taxes 2013/14 2014/15 Expected income tax rate 16.8% 17.6% Expected withholding tax rate 2.0% 0.8% Expected tax rate 18.8% 18.4% Permanent differences 0.1% 0.5% Effect of changes in tax rates on deferred tax -2.9% -2.4% Adjustment in respect of previous period’s income tax -0.1% -0.4% Othe
Slide 34: Net Profit
3. Net Profit Q3 Q4 In CHF millions In % of sales 2013/14 2014/15 2013/14 2014/15 50 20% Net profit 45.6 43.1 11.7 10.0 in CHF millions 45 18% Net profit 18.6% 16.7% 18.0% 16.2% 40 16% in % of sales 35 14% 2013/14 -1.4 -8.7 30 12% 55.7 45.6 25 10% 20 8% EBIT Financial expense Income tax Net profit 1
Slide 35: Cash Flow Statement
3. Cash Flow Statement In CHF millions 2013/14 2014/15 Profit before taxes 54.4 51.5 Adjustment for noncash items and taxes paid -5.1 4.3 Cash flow from changes in net working capital -8.7 -5.6 Cash flow from operating activities 40.6 50.2 Cash flow from investing activities -8.7 -9.7 Free cash flow
Slide 36: 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 to Shareholders Meeting Andreas Hürlimann HLSR 36
Slide 37: 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 37
Slide 38: Executing Strategy
4. Executing Strategy Strategic priorities Achievements in 2014/15 Increase technology leadership ■ Reinforce multidisciplinary innovation team ■ Launched high number of new ■ Increase number of product launches products ■ Constantly improve performance of products ■ Started development & engineerin
Slide 39: Andrea Borla new CFO
4. Andrea Borla new CFO ■ With LEM as of 1 December 2015 ■ Currently CFO at Schindler France ■ Previously a regional general manager at Schindler China and head of group consolidation at SAirGroup ■ Holds a PhD and a Master’s degree in Finance and Accounting from University of St. Gallen ■ Age 48, S
Slide 40: Rainer Bos new head of Automotive segment
4. Rainer Bos new head of Automotive segment ■ Succeeding Luc Colombel as of July 2015 ■ Currently managing director, Automotive at Amphenol- Tuchel Electronics GmbH ■ Held leadership positions in business management, Sales & Marketing, key account management and R&D Projects in Delphi and Continent
Slide 41: Outlook
4. Outlook ■ For 2015/16 we expect ■ Volume growth (in number of transducers) in both segments ■ Price pressure und foreign exchange effects may adversely affect LEM, leading to uncertainty regarding sales growth ■ EBIT margin expected to be within the target range of 15 to 20% ■ Swiss franc 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 to Shareholders Meeting Andreas Hürlimann ITL 1200-T 42
Slide 43: Dividend Proposal
5. Dividend Proposal LEM Dividend History ■ Dividend policy of distributing significantly more than 50% of 40 40 40* consolidated net profit to shareholders 30 ■ Ordinary dividend of CHF 40 per share proposed 25 ■ Payment corresponds to a payout ratio of 105.7% ■ Sign of trust in the Company’s futur
Slide 44: Proposed New Board Member Ulrich J. Looser
5. Proposed New Board Member Ulrich J. Looser ■ M.Sc. Physics ETH Zurich, M.A. HSG, University of St. Gallen ■ Partner and entrepreneur at BLR & Partners, since 2009 ■ Board member of Straumann, Kardex and other privately held companies ■ Previously leading management positions at Accenture incl. Ch
Slide 45: At the heart of power electronics
O&A At the heart of power electronics
Slide 46: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 25 June 2015 Ordinary General Meeting of the Shareholders for the year 2014/15 30 June 2015 Dividend ex-date 2 July 2015 Dividend payment date 11 August 2015 First quarter 2015/16 results 11 November 2015 Half-year 2015/16 results 16 February