LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2013/14 Earnings Presentation
45 slides from LEM Holding SA's earnings presentation, Jun 4, 2014
Slide 1: Results Q4 of 2013/14, Financial Year 2013/14
Results Q4 of 2013/14 Financial Year 2013/14 Media and Analyst Conference Zurich, 4 June 2014
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 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: Hybrid Loader
1. LEM Applications: Hybrid Loader A hybrid loader boosts fuel economy by up to A HTFS 800-P 25%, increases the system performance and is half as loud as a conventional loader. The special internal combustion engine (1) drives an AC generator (2) for the bucket 6 1 moves. The generator converts the
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: Roller Coaster
1. LEM Applications: Roller Coaster 1 Roller coasters use less and less traditional chain lift. The ride is maintained by gravity. 2 The initial acceleration energy is provided via 3 4 one or several linear motors (4), catapults, or other mechanisms replacing hydraulic or 5 pneumatic power. In case
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 2013/14 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 to Shareholders Meeting Andreas Hürlimann 9
Slide 10: Highlights 2013/14: Record Profitability
2. Highlights 2013/14: Record Profitability In CHF million, % 2013/14 2013/14 vs. Q4 vs. Q3 2013/14 2012/13* Orders 246.4 +6.9% +8.2% Sales 245.6 +4.5% +6.1% EBIT 55.7 +36.5% +14.3% Net profit 45.6 +40.9% +45.3% ■ All-time highs for EBIT margins and net profit ■ Solid sales growth in a fragile econo
Slide 11: Eight Product Launches 2013/14 (1/3)
2. Eight Product Launches 2013/14 (1/3) ITL 1200-T Extended current range from 900 to 1200 A High accurate fluxgate closed loop technology Accuracy is expressed in ppm Industry Designed for latest versions of MRI RT 500 Rogowski coil measurement technology Split-core current sensor for e
Slide 12: Eight Product Launches 2013/14 (2/3)
2. Eight Product Launches 2013/14 (2/3) HO xx-P ASIC with twice improved accuracy New functionalities: over-current detection, fault reporting function Industry PCB-mount design and contactless measurement Big hole for cable HFWS Customer specific transducer Higher current range launchin
Slide 13: Eight Product Launches 2013/14 (3/3)
2. Eight Product Launches 2013/14 (3/3) HC5 FW Open loop transducer For inverters, starter generators, converters Improved performance at lower price Automotive DHAB V2 Cost effective management of lithium batteries For electric and hybrid vehicles Automotive 13
Slide 14: Net Sales
2. Net Sales In CHF millions In CHF millions, % 300 Sales YoY Q4 vs. as at constant Q3 275 reported currencies 250 Industry 211.1 +5.6% +7.9% +8.6% 225 Automotive 34.6 -1.2% +2.9% -7.2% 200 Total sales 245.6 +4.5% +7.1% +6.1% 175 150 ■ Growth contribution from Industry businesses 125 ■ Disappointing
Slide 15: Quarterly View
2. Quarterly View In CHF millions Book-to-bill ratio 80.0 1.2 Stable book-to-bill ratio 70.0 67.7 63.1 61.1 65.1 Lead times requested 1.0 57.9 55.0 61.8 57.6 61.1 by customers remain 60.0 55.7 55.0 55.8 short 0.8 50.0 40.0 0.6 30.0 0.4 20.0 0.2 10.0 0.0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 11
Slide 16: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets Europe In CHF million, % Sales Growth Growth North America YoY Q4 vs. Q3 Asia and ROW Europe 94.4 -0.9% +17.5% N. America 27.1 -4.9% +17.1% Asia and 89.6 +17.4% -2.8% 42% 45% ROW Total 211.1 +5.6% +8.6% Tailwind from improving economic environment towards end
Slide 17: Industry Segment: Business Development
2. Industry Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 25 Drives & welding (growth YoY: +10%) 280 Market growth in China, good performance in other regions 240 20 Stable market share 200 Renewable energies & power supplies (+6%) 15 Investme
Slide 18: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets In CHF million, % Europe Sales Growth Growth YoY Q4 vs. Q3 North America Asia and Rest 9% Europe 3.0 +3.1% -24.7% of World N. America 18.0 -0.0% -5.9% Asia and 13.6 -3.6% -4.4% 39% ROW Total 34.6 -1.2% 7.2% Focus on Asian and North American markets Negativ
Slide 19: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 40 40 Conventional cars (growth YoY: +4%) 35 35 Performance reflects global car markets: flat in Europe, robust performance in Asia and 30 30 the US Solid demand for battery management
Slide 20: 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 ■ Biggest market with 23% of total (57% of total production, compared to sales 51% in financial year 2012/13) ■ “Made by LEM” quality In CHF millio
Slide 21: New Production Site in Sofia (Bulgaria)
2. New Production Site in Sofia (Bulgaria) Achievements Investment of CHF 2 million into new site Production started 1 October 2013 Delivery approvals from customers received First products delivered to customers Objectives of the new site Diversify LEM’s cost-competitive production
Slide 22: 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 22
Slide 23: Financial Highlights
3. Financial Highlights All-time high operational profitability at 22.7% on 245.6 million sales All-time high net profit for the year at CHF 45.6 million (18.6% of sales) Low tax rate of 16.0% Strong free cash flow of CHF 31.9 million Increase in inventories of CHF 4.9 million to facilitat
Slide 24: Balance Sheet Analysis
3. Balance Sheet Analysis In CHF millions 31.3.2013* 31.3.2014 Net working capital 23.2 38.7 Fixed assets 36.8 37.8 Noncurrent liabilities -3.5 -6.9 Net operating assets 56.4 69.6 Net cash / (debt) 27.6 24.6 Equity 84.0 94.2 Equity ratio 61.9% 65.1% Days of sales outstanding 60 65 Days of inventory
Slide 25: Income Statement
3. Income Statement In CHF millions Q3 Q4 2012/13* 2013/14 Change Change 2013/14 2013/14 Sales 235.0 245.6 +4.5% 57.6 61.1 +6.1% Gross margin 41.9% 47.0% +5.0pt 46.5% 48.4% +1.9pt Operating exp. -57.7 -59.6 +3.3% -14.9 -16.0 +7.6% EBIT 40.8 55.7 +36.5% 11.9 13.6 +14.3% Net financial exp. -1.5 -1.4 -
Slide 26: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 80 30% 2013/14 includes ramp- 67.7 63.1 up cost for Sofia site 70 25% 61.1 61.8 65.1 57.9 55.0 55.8 61.1 Fourth consecutive 60 55.0 55.8 57.6 20% quarter with EBIT 50 margin above target 15% range 40 Q4 of 2012/13 includes 10% 30 a restructur
Slide 27: Gross Margin
3. Gross Margin In CHF millions In % of sales 48% Q3 Q4 2012/13* 2013/14 135 47% 2013/14 2013/14 120 Gross margin 98.6 115.4 26.8 29.6 46% in CHF million 105 45% Gross margin 41.9% 47.0% 46.5% 48.4% 90 in % of sales 44% 75 43% 60 Positive impacts on gross margin due to 42% focus on 45 41% Raw ma
Slide 28: Operating Expense
3. Operating Expense In CHF millions In % of sales 70 30% Q3 Q4 2012/13* 2013/14 2013/14 2013/14 60 Operating expense 57.7 59.6 14.9 16.0 in CHF million 50 20% Operating expense 24.6% 24.3% 25.8% 26.2% 40 in % of sales 30 Ongoing strict cost control measures 10% Operating expense as a percentage
Slide 29: R&D Expense
3. R&D Expense In CHF millions In % of sales Q3 Q4 15 8% 2012/13* 2013/14 2013/14 2013/14 R&D 12 expense 14.7 14.4 3.6 3.5 6% in CHF million R&D expense 6.3% 5.9% 6.2% 5.7% 9 in % of sales 4% Maintained high investment in R&D for 6 both segments Ongoing renewal of product range with 2% 3 focus o
Slide 30: EBIT
3. EBIT In CHF millions In % of sales 60 25% Q3 Q4 2012/13* 2013/14 2013/14 2013/14 50 20% EBIT 40.8 55.7 11.9 13.6 in CHF million 40 EBIT 17.4% 22.7% 20.7% 22.2% 15% in % of sales 30 Continued cost control and high gross 10% 20 margins In Q3 EBIT margin impacted by lower 5% volumes 10 Profita
Slide 31: Financial Expense
3. Financial Expense In CHF millions Q3 Q4 2012/13* 2013/14 2013/14 2013/14 Exchange effect** -1.5 -1.4 -0.9 0.2 Other financial expense & income -0.0 +0.0 -0.0 0.1 Total -1.5 -1.4 -0.9 0.3 2013/14 exchange effect mainly driven by appreciation of CHF vs. USD and JPY Foreign exchange hedging poli
Slide 32: Income Taxes
3. Income Taxes 2012/13* 2013/14 Expected income tax rate 15.5% 16.8% Expected withholding tax rate 2.3% 2.0% Expected tax rate 17.8% 18.8% Effect of changes in tax rates on deferred tax 0.1% -2.9% Other differences -0.4% 0.1% Effective tax rate 17.5% 16.0% Slightly higher expected tax rate due to
Slide 33: Net Profit
3. Net Profit Q3 Q4 In CHF millions In % of sales 2012/13* 2013/14 2013/14 2013/14 Net profit 32.4 45.6 8.6 12.5 50 20% in CHF million 45 Net profit 13.8% 18.6% 14.9% 20.4% 18% in % of sales 40 16% 2012/13 35 30 14% -1.5 -6.9 40.8 32.4 25 12% 20 EBIT Fin. exp. Income tax Net profit 10% 15 2013/14 8%
Slide 34: Cash Flow Statement
3. Cash Flow Statement In CHF millions 2012/13* 2013/14 Profit before taxes 39.3 54.4 Non-cash items 5.1 -5.1 Cash flow from changes in net working capital 1.8 -8.7 Cash flow from operating activities 46.2 40.6 Cash flow from investing activities -10.4 -8.7 Free cash flow 35.8 31.9 Cash flow from fi
Slide 35: 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 35
Slide 36: 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 36
Slide 37: Executing Strategy
4. Executing Strategy Strategic priorities Achievements in 2013/14 Increase technology leadership ■ Reinforce multidisciplinary innovation team ■ Launched 8 new products ■ Increase number of product launches ■ Worldwide technology survey ■ Constantly improve performance of products ■ Developed netwo
Slide 38: Outlook
4. Outlook ■ Economic perspectives improving with modest pick-up in Europe and North America and robust performance in China ■ For 2014/15 we expect ■ Industry segment: well positioned to capitalize on economic improvements and support from new products ■ Automotive segment: resume growth backed by
Slide 39: 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 39
Slide 40: Dividend Proposal
5. Dividend Proposal LEM Dividend History ■ High trust in the company’s capability to generate strong 40* 40** cash flows ■ Ordinary dividend of CHF 40 30 per share 25 ■ Payment corresponds to a payout ratio of 99.8% 20 2009/10 2010/11 2011/12 2012/13 2013/14 40 * Including CHF 10 from early termina
Slide 41: "Minder" Implementation at LEM – Guiding Principles
5. “Minder” Implementation at LEM – Guiding Principles LEM specifics Medium sized company with a matching lean Board of Directors and management structure Board of Directors committees prepare decisions and provide recommendations only, the entire Board of Directors decides and remains respons
Slide 42: Say-on-Pay – Proposed Approval Process
5. Say-on-Pay – Proposed Approval Process FY 2013 | 14 FY 2014 | 15 FY 2015 | 16 FY 2016 | 17 FY 2017 | 18 FY 2018 | 19 31.3. |1.4. 30.9.|1.10. 31.3. |1.4. 30.9.|1.10. 31.3. |1.4. 30.9.|1.10. 31.3. |1.4. 30.9.|1.10. 31.3. |1.4. 30.9.|1.10. 31.3. |1.4. 30.9.|1.10. AGM AGM AGM AGM AGM AGM 2013 2014 20
Slide 43: Proposed Implementation of Other Important Provisions
5. Proposed Implementation of Other Important Provisions Powers and duties of the Compensation Committee Details to be addressed at committee regulation level Compensation Committee can assume other duties, given the small Board of Directors Maximum number of external mandates of members of
Slide 44: Q&A
Q&A At the heart of power electronics
Slide 45: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 26 June 2014 Ordinary Shareholders’ Meeting for the year 2013/14 1 July 2014 Dividend ex-date 4 July 2014 Dividend payment date 12 August 2014 First quarter 2014/15 results 13 November 2014 Half-year 2014/15 results 17 February 2015 Third qua