LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2011/12 Earnings Presentation
42 slides from LEM Holding SA's earnings presentation, Jun 6, 2012
Slide 1: Results Q4 of 2011/12 and Fiscal Year 2011/12
Results Q4 of 2011/12 and Fiscal Year 2011/12 Media & Analyst Conference Zurich, 6 June 2012
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 applications in Industrial, Traction, Energy & Automation and Automotive markets. ■ LEM is a high
Slide 4: LEM Applications: Robot
1. LEM Applications: Robot To control the arm, power inverters drive a motor from one position to the next and stop precisely in position Accurate measurement of the current with transducers needed to control the arm A CASR 1 Control Unit 2 Inverter 3 Motor 4
Slide 5: LEM Applications: Mobile Phone Base Station
1. LEM Applications: Mobile Phone Base Station Transducers ensure stable power supply and control in case of a failure Transducers used to control the charge and discharge of power batteries for backup A HASS B LTS 1 Antenna 2 Battery 3 Controller 4 Power supply 5
Slide 6: LEM Applications: Electric Plug-in Car
1. LEM Applications: Electric Plug-in Car Battery management Electric motor management Charger management 1 High-voltage battery 2 Vehicle control unit 3 Charger 4 Motor controller A HAH1 B DHAB 5 Electric motor and transaxle C HC5F 6 DC/DC converter 6 D CAB 7 Electric power steering
Slide 7: LEM Applications: Plasma Cutting
1. LEM Applications: Plasma Cutting To maintain the arc continuously, current transducer measures the current through the arc Accuracy of measurement is important to guarantee accuracy and shape of cut A LAH 1 Electronic 2 Motor 3 Torch 7 3 XY-table
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 Renewable energies & Green cars (HEV, EV) power supplies ■ Battery pack management ■ Solar ■ Electric mot
Slide 10: Highlights and Business Review
2. Highlights and Business Review François Gabella, CEO 10
Slide 11: Highlights 2011/12
2. Highlights 2011/12 In CHF million, % 2011/12 2011/12 vs. 2010/11 Q4 vs. Q3 2011/12 Orders 182.9 -45.7% 16.2% Sales 236.3 -20.2% 1.6% Operational EBIT 34.2 -43.4% 15.6% Net earnings 28.5 -28.1% 38.2% ■ Economic weakness adversely impacted LEM’s industry businesses with renewables energies business
Slide 12: Net Sales
2. Net Sales In CHF millions In CHF million, % Sales YoY YoY QoQ at constant 300 currencies 275 Industry 208.3 -23.6% -16.2% -0.9% 250 Automotive 28.0 19.1% 34.3% 17.5% 225 Total sales 236.3 -20.2% -12.2% 1.6% 200 175 ■ Second highest sales in LEM 150 history after record 2010/11 125 ■ Industry busi
Slide 13: Quarterly View
2. Quarterly View In CHF millions Book‐to‐bill ratio 100 1.4 ■ Slow recovery of bookings: 90 Q4 of 2011/12 book-to-bill 80 77.0 77.4 1.2 ratio 0.99 75.0 70 66.8 67.7 1.0 ■ Customers’ inventory 58.4 57.9 60 55.0 55.7 0.8 corrections ended in Q4 of 50 48.3 2011/12 43.2 0.6 40 35.6 ■ Cancellations of o
Slide 14: Cost and Capacity Management Update
2. Cost and Capacity Management Update On 22 September 2011 LEM announced a step-up of cost reduction measures Reduction of worldwide headcount to below 1’100 employees Continued transfer of production lines to China Strict cost control Successful cost management Restructuring cost of CH
Slide 15: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets Europe In CHF million, % Sales YoY QoQ North America Asia Rest of the World 2% Europe 107.3 -26.6% 19.4% N. America 27.6 -9.1% -1.0% Asia 68.5 -24.7% -23.9% 33% ROW 4.9 -4.7% -42.3% Total 208.3 -23.6% -0.9% 52% Intensified competition with new capacities and b
Slide 16: Industrial Segment: Business Development
2. Industrial Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 25 Drives & welding Weak demand and continued inventory 280 corrections of customers in Europe and Asia in H1 2011/12 240 20 Stabilization since Q4 of 2011/12 Renewable energies & power
Slide 17: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets Europe In CHF million, % Sales YoY QoQ North America Asia and Rest of World 9% Europe 2.7 -8.9% 39.9% N. America 14.5 14.4% 10.6% 39% Asia and 10.9 36.8% 21.7% ROW Total 28.0 19.1% 17.5% Global car industry performed well in 2011/12 with more focus on energy
Slide 18: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 30 25 Conventional cars Increased sales with key customers 25 20 Won new contracts in Asia and North America 20 15 New start/stop application attractive addition to the product range
Slide 19: Business Development Automotive Market
2. Business Development Automotive Market New business Added platforms Added platforms Application In volume > CHF 0.5 million 2011/2012 2012/2013 USA BM x Q3 Q1 + Q3 USA BM Q4 USA Green Car x Q3 Q1 Europe BM x Q3 Europe Green Car x Q4 Q2 Korea Green Car x Q2 Q2 + Q4 Japan BM Q4 Japan BM x Q2 Q2 Jap
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 ■ Sales impacted by slowing activity (43.2% of total production, compared to especially in solar, wind and traction 37.5% in 2010/11) ■ “Made by LE
Slide 21: Financial Review
3. Financial Review Julius Renk, CFO 21
Slide 22: Consolidated Balance Sheet
3. Consolidated Balance Sheet In CHF thousands 31.3.2011 31.3.2012 Cash and cash equivalents 27’231 21’121 Accounts receivable 60’026 42’140 Inventories 34’187 26’605 Other current assets 3’027 4’965 Total non-current assets 37’508 37’683 Total assets 161’979 132’514 Accounts payable 29’617 17’863 O
Slide 23: Income Statement
3. Income Statement Q3 Q4 In CHF thousands,% 2010/11 2011/12 Change Change 2011/12 2011/12 Sales 296’203 236’634 -20.2% 54’980 55’844 1.6% Gross margin 42.6 40.8% -1.8%pt 41.0% 37.0% -4.0%pt Operating expenses -65’886 -62’315 -5.4% -15’569 -12’617 -19.0% Operational EBIT 60’413 34’171 -43.4% 6’946 8
Slide 24: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 100 30% ■ Orders normalizing, sales 90 stabilizing 25% 75.0 80 77.0 77.4 66.8 20% ■ Improved operating EBIT margin 70 58.4 67.7 in Q4 of 2011/12 ; still below 48.3 57.9 60 55.0 55.8 15% target range 43.2 50 40 35.6 10% ■ High net profit in % of sal
Slide 25: Gross Margin
3. Gross Margin Q3 Q4 In CHF millions In % of sales 2010/11 2011/12 2011/12 2011/12 140 50% Gross margin 126.3 96.5 22.5 20.6 in CHF million 48% 120 46% Gross margin 42.6% 40.8% 41.0% 37.0% in % of sales 100 44% ■ Negative impacts on gross margin: 42% 80 ■ Foreign exchange effects 40% 60 ■ Increased
Slide 26: Operating Expenses
3. Operating Expenses In CHF millions In % of sales Q3 Q4 2010/11 2011/12 2011/12 2011/12 90 50% Operating 80 expenses 65.9 62.3 15.6 12.6 in CHF million 40% 70 Operating expenses 22.2% 26.4% 28.3% 22.6% 60 in % of sales 30% 50 ■ Restructuring cost of CHF 0.7 million in Q2 of 2011/12 40 20% ■ All sa
Slide 27: R&D Expenses
3. R&D Expenses In CHF millions In % of sales Q3 Q4 2010/11 2011/12 15 12% 2011/12 2011/12 R&D expenses 14.0 13.0 3.4 2.6 in CHF million 12 9% R&D expenses 4.7% 5.5% 6.2% 4.7% in % of sales 9 6% ■ R&D exempt from restructuring exercise ■ R&D expense within long-term average 6 of 5.5% 3% 3 0 0% 07/08
Slide 28: Operational EBIT
3. Operational EBIT Q3 Q4 In CHF millions In % of sales 2010/11 2011/12 2011/12 2011/12 70 24% Operational EBIT 60.4 34.2 6.9 8.0 60 22% in CHF million Operational 50 20% EBIT 20.4% 14.5% 12.6% 14.4% in % of sales 40 18% ■ Excluding additional SOP cost/income 30 16% ■ Exceptionally good profitabilit
Slide 29: Legacy SOP Programs Expired per 31.03.2012
3. Legacy SOP Programs Expired per 31.03.2012 ■ Additional stock option plan cost/income amounted to CHF 0.3 million, directly linked to the share price decrease from CHF 570 at 31 March 2011 to CHF 494.50 at 31 March 2012 ■ With the closing of fiscal year 2011/12, all legacy stock option plans are
Slide 30: Financial Expense
3. Financial Expense In CHF thousands Q3 Q4 2010/11 2011/12 2011/12 2011/12 Exchange effect* -4’263 -1’704 359 -1’028 Other financial expense & -359 -258 -69 -62 income Total -4’622 -1’962 290 -1’090 Q4 of 2011/12 exchange effect mainly driven by JPY (dividend), EUR, USD Foreign exchange hedging
Slide 31: Income Taxes
3. Income Taxes In CHF thousands 2010/11 2011/12 EBT 50’365 32’524 Income taxes -10’722 -4’037 Effective tax rate 21.3% 12.4% Strongly decreased tax rate from 34.9% in 2009/10 to 12.4% in 2011/12 Expected tax rate decreased from 31.9% in 2009/10 to 17.8% in 2011/12 Events in 2011/12: Japan w
Slide 32: Income Taxes
3. Income Taxes Expected One-off Total tax tax rate items rate 2010/11 effective tax rate -20.8% -0.5% -21.3% Japan withholding tax reduced for results covering prior years +3.7% +3.7% Other adjustments in withholding tax for results covering prior years +2.5% +2.5% China adjustment in prior period
Slide 33: Net Profit
3. Net Profit Q3 Q4 CHF millions % of sales 2010/11 2011/12 2011/12 2011/12 45 20% Net profit 39.6 28.5 5.7 7.8 in CHF million 40 18% Net profit 13.4% 12.1% 10.3% 14.0% in % of sales 35 16% ‐5.4 ‐4.6 2010/11 ‐10.7 30 14% 60.4 25 39.6 12% 20 Operational EBIT SOP inc./cost Financial Income tax Net pro
Slide 34: Cash Flow Statement
3. Cash Flow Statement In CHF thousands 2010/11 2011/12 Profit before taxes 50’365 32’524 Non-cash items 1’133 2’892 Cash flow from changes in net working capital -21’452 11’238 Cash flow from operating activities 30’046 46’654 Cash flow from investing activities -9’383 -9’120 Free cash flow 20’663
Slide 35: Financial Highlights in 2011/12 - Summary
3. Financial Highlights in 2011/12 - Summary Strong balance sheet at 31 March 2012 ■ Total assets CHF 132.5 million (CHF 162.0 million) ■ Equity ratio 60% (unchanged) ■ Net financial assets CHF 18.1 million (CHF 26.6 million) Profitability slightly below target range ■ In fiscal year 2011/12 operati
Slide 36: Strategy and Outlook
4. Strategy and Outlook François Gabella, CEO 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 markets 37
Slide 38: Strategic Priorities to Extend Leadership Position
4. Strategic Priorities to Extend Leadership Position Increase technology leadership ■ Established multidisciplinary innovation team ■ R&D roadmap foresees increased number of product launches ■ Improve performance of products in terms of precision and functionalities ■ Dedicated team of experts to
Slide 39: Outlook
4. Outlook ■ We expect the economic climate to remain challenging and uncertainty to persist in LEM’s markets ■ For 2012/13 we expect: ■ progressive restart in the Industry segment ■ growth in the Automotive segment ■ increasing competitive pressure ■ Our ambition is to deliver a result within the o
Slide 40: Proposals Shareholders' Meeting
5. Proposals Shareholders’ Meeting Felix Bagdasarjanz, Chairman of the Board 40
Slide 41: Proposals for the Shareholders' Meeting
5. Proposals for the Shareholders’ Meeting Dividend proposal ■ Ordinary dividend of CHF 25 per share ■ Payment corresponds to a payout ratio of 99.7% Organizational structure ■ Transfer seat of LEM Holding SA to Fribourg ■ LEM becoming an increasingly global company with the majority of its employee
Slide 42: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 28 June 2012 Ordinary shareholders’ meeting for the year 2011/12 4 July 2012 Dividend ex-date 9 July 2012 Dividend payment date 7 August 2012 First quarter results of 2012/13 13 November 2012 Half-year results of 2012/13 14 February 2013 Thir