LEM Holding SA · SIX:LEHN
LEM Holding SA — FY2009/10 Earnings Presentation
45 slides from LEM Holding SA's earnings presentation, Jun 3, 2010
Slide 1: Results Q4 and Year 2009/10
Results Q4 and Year 2009/10 Media & Analyst Conference Zurich, 3 June 2010
Slide 2: Agenda
Agenda 1. Highlights and Business Review Paul Van Iseghem 2. Business Development Paul Van Iseghem 3. Financial Review Julius Renk 4. Strategy and Outlook Paul Van Iseghem 5. Succession of the CEO Felix Bagdasarjanz 6. Proposals Shareholders’ Meeting Felix Bagdasarjanz 2 2 June 2010
Slide 3: LEM Business Card
LEM Business Card ■ LEM is the global market leader in providing innovative and high quality solutions for measuring electrical parameters ■ Its current and voltage transducers are used in a broad range of applications in industry, traction, energy & automation and automotive markets ■ LEM is a high
Slide 4: LEM Production and Logistics World-Wide
LEM Production and Logistics World-Wide Production Centers (PDCs) Adaptation Centers Sales Offices Agents / Distributors 4 2 June 2010
Slide 5: Markets Served
Markets Served Traditional Markets New Markets Industry ■ All areas of reliable current Automotive ■Battery Management measurement ■ Motor drives, power conversion (all car types) ■ Electric Motor Control AC/DC, power supplies, UPS, welding, medical scanner, new (HEV-EV) energies, leakage current ■
Slide 6: 1. Highlights and Business Review
1. Highlights and Business Review Paul Van Iseghem, President & CEO 2 June 2010
Slide 7: Financial Highlights - Moving Strongly out of the Recession
1. Financial Highlights - Moving Strongly out of the Recession Q3 to Q4 2009/10 Year to Year Sales 20.9% -5.7% Operational EBIT 32.4% -11.6% After accounting for the stock option plans EBIT 7.6% -48.2% Net earnings 28.2% -56.0% 7 2 June 2010
Slide 8: Business Highlights
1. Business Highlights ■ Opening of a new 10’000 m2 facility in Beijing, China ■ Acquisition of Danfysik ACP in Copenhagen, Denmark ■ Growth of renewable energy business over pre-crisis levels ■ Automotive production transferred to China, reaching break-even for 2 consecutive quarters 8 2 June 2010
Slide 9: Business Review – Zoom-in on the Recession
1. Business Review – Zoom-in on the Recession CHF millions Op. RoS 80 30% 70 60 20% 50 40 ■ Q4 book to bill ratio 1.34 30 10% ■ Q4 sales over Q1 and Q2 20 of 2008/09 10 0 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008/09 2008/09 2008/09 2008/09 2009/10 2009/10 2009/10 2009/10 Orders received Sales 9 2 June 2010
Slide 10: Business Review - Sales
1. Business Review - Sales CHF millions 200 ■ Last 2 years effected by the recession …. going in and going out 150 ■ Sales for the year of CHF 185.5 million, a decrease of 5.7% 100 ■ A slow start to the year but pick up in the last 2 quarters 50 ■ Q3 to Q4 sales increased by over 20% ■ Sales in the
Slide 11: Business Review – Industrial Segment
1. Business Review – Industrial Segment Sales Year to Sales Q3 to Q4 growth Year M CHF 2% Europe -13% 26% 94 31% N. America -17% 17% 20 Asia 17% 16% 54 55% ROW -19% 20% 3 Europe Total -6% 21% 171 North America 12% Asia Rest of the World No recession in Asia 11 2 June 2010
Slide 12: Business Review – Industrial Segment
1. Business Review – Industrial Segment CHF millions Op. EBIT in % of sales 200 25 Markets and Applications Industry: Decrease of sales by 5.9% 160 20 for the year and Q3 to Q4 growth of 28% Strong recovery of motor drives market and renewable energy markets, now 120 15 18% of total sales (FY 2007/0
Slide 13: Business Review – Automotive Segment
1. Business Review – Automotive Segment Sales Year to Sales Q3 to Q4 growth Year M CHF 10% Europe 54% 60% 1 41% N. America -6% 1% 8 Asia -3% 38% 6 49% Total -1% 21% 15 Europe North America Asia and Rest of World Our focus on Asia shows results 13 2 June 2010
Slide 14: Business Review – Automotive Segment
1. Business Review – Automotive Segment CHF millions Op. EBIT in % of sales Market 25 25 Start of production for several new customers in USA, Japan and Europe 20 20 Two consecutive quarters of break-even 15 15 for Op. EBIT 10 10 Q3 to Q4 growth of 21% 5 5 Applications 0 0 Multiple customers in Asia
Slide 15: 2. Business Development
2. Business Development Paul Van Iseghem, President & CEO
Slide 16: Business Development – Results for the Industry Market
2. Business Development – Results for the Industry Market New Business Region SoP SoP > CHF 0.5 million 2009/10 2010/11 Photovoltaic Japan Q4 Photovoltaic, Wind China Q1 Drives, Airconditioning N. America Q2 Photovoltaic, Wind Spain Q4 Wind Scandinavia Q3 Drives, Airconditioning Scandinavia Q3 Photo
Slide 17: Business Development – Results for the Automotive Market
2. Business Development – Results for the Automotive Market New Business Application In SoP > CHF 0.5 million volume 2010/11 China BM, EV, HEV x Japan BM x Q2 Japan BM x Japan EPS x Korea EV, HEV x Q1 Europe BM x Europe EV, HEV x USA EV, HEV, BM x Q4 USA BM x Q2 EV = electric vehicle, HEV = hybrid e
Slide 18: Business Development China
2. Business Development China Sales Production ■ Market share of 50+% ■ Opening of a 10’000 m2 facility CHF millions CHF millions 70 70 60 60 50 50 CAGR: 24% 40 40 30 30 20 20 10 10 0 0 05/06 06/07 07/08 08/09 09/10 05/06 06/07 07/08 08/09 09/10 18 2 June 2010
Slide 19: Business Development - Innovation
2. Business Development - Innovation Acquisition of LEM Danfysik creates a broader range of high accuracy products for the medical, test and measurement and precision motor controls market We also launched: ■ ITL 900 the most precise industrial transducer in the market today ■ RT coil – setting a ne
Slide 20: 3. Financial review
3. Financial review Julius Renk, CFO
Slide 21: Income Statement
3. Income Statement In CHF thousands 2008/09 2009/10 % Sales 196’813 185’512 - 5.7% Gross margin % 43.7 43.4 -0.3 ppt Operating costs (56’806) (54’629) 3.8% Operational EBIT 29’219 25’807 -11.7% Additional SOP income/costs 4’622 (8’285) -279.3% EBIT 33’841 17’522 -48.2% Net financial expenses (990)
Slide 22: Gross Margin Development
3. Gross Margin Development In CHF millions 2008/09 2009/10 CHF millions % of sales Gr. margin 86.0 80.4 90 60% Gr. margin 43.7% 43.4% 75 % Sales 45% 60 45 30% 30 15% Lower sales over the last two years 15 led to a negative leveraging effect 0 0% 2005/06 2006/07 2007/08 2008/09 2009/10 22 2 June 2
Slide 23: Operating Expenses
3. Operating Expenses CHF millions % of sales 70 50% In CHF millions 2008/09 2009/10 45% 60 40% OpEx 56.8 54.6 50 35% OpEx 30% 28.9% 29.4% 40 % Sales 25% 30 20% 15% 20 10% The cost reductions introduced in November 10 2008 continue to show effect 5% 0 0% 2005/06 2006/07 2007/08 2008/09 2009/10 23
Slide 24: R&D Expenses
3. R&D Expenses In CHF millions 2008/09 2009/10 CHF millions % of sales R&D 10.8 11.5 15 12% R&D 5.5% 6.2% % Sales 12 9% 9 6% 6 ■ Continuing R&D at 5.7% of sales ■ LEM Danfysik corresponding to 0.5% of sales: 3% LEM Danfysik IPR amortization 3 R&D activities in Copenhagen 0 0% 2005/06 2006/07 20
Slide 25: Operational EBIT
3. Operational EBIT CHF Avg. Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 millions 2007/08 2008/09 2008/09 2008/09 2008/09 2009/10 2009/10 2009/10 2009/10 Sales 50.8 55.5 55.5 45.1 40.7 35.6 43.2 48.2 58.4 Op. 8.7 12.0 9.4 4.1 3.7 3.2 5.4 7.4 9.8 EBIT Op. 17.2% 21.6% 16.9% 9.0% 9.3% 8.9% 12.6% 15.3% 16.8% RoS Q4 200
Slide 26: Operational EBIT
3. Operational EBIT In CHF millions 2008/09 2009/10 CHF millions % of sales Op EBIT 29.2 25.8 Op EBIT 30% 14.8% 13.9% 30 % Sales 20% 20 10 10% Operational EBIT is result of gross margin and OpEx, excluding additional SOP cost/income 0 0% 2005/06 2006/07 2007/08 2008/09 2009/10 26
Slide 27: SOP volatility significantly reduced going forward
3. SOP volatility significantly reduced going forward ■ LEM stock option plans (SOP) are cash settled; their cost is driven by share price development (270; 150; 340 at respective year end) ■ “SOP 4 Special Offer” in 02-03/2010 – Allowed to close SOP4 per 31.03.2010 instead of 31.03.2015 ■ Significa
Slide 28: EBIT
3. EBIT In CHF millions 2008/09 2009/10 CHF millions % of sales 40 EBIT 33.8 17.5 30% EBIT 17.2% 9.4% % Sales 30 20% 20 10% 10 2009/10 with reverse SOP impact 0 0% 2005/06 2006/07 2007/08 2008/09 2009/10 28 2 June 2010
Slide 29: Taxes
3. Taxes 2008/09 2009/10 Expected income tax rate 25.0% 25.7% Expected withholding tax rate 4.7% 6.2% Expected tax rate 29.7% 31.9% Withholding tax for results from prior years 3.0% One-time effects -2.5% Effective tax rate 27.2% 34.9% LEM decided to repatriate all available dividends from subsidi
Slide 30: Net profit
3. Net profit In CHF millions 2008/09 2009/10 CHF millions % of sales Net profit 23.9 10.5 25 25% Net profit 20 20% 12.1% 5.7% % Sales 15 15% EPS diluted 20.83 9.17 10 10% +4.6 -1.0 2008/09 -8.9 5 5% 29.2 23.9 0 0% 2005/06 2006/07 2007/08 2008/09 2009/10 2009/10 -8.3 Net profit decreased by 56% st
Slide 31: Consolidated Balance Sheet
3. Consolidated Balance Sheet In CHF thousands 31.03.2009 31.03.2010 Cash and cash equivalents 27’951 29’756 Accounts receivable 31’920 43’454 Inventories 23’728 21’744 Other current assets 2’834 1’989 Total non-current assets 29’778 35’719 Total assets 116’211 132’662 Accounts payable 12’614 23’416
Slide 32: Cash Flow Statement
3. Cash Flow Statement In CHF thousands 2008/09 2009/10 Net profit 23’925 10’532 Non-cash items 3’361 7’676 Cash flow before changes in NWC 27’286 18’208 Cash flow from changes in net working capital 3’651 8’091 Cash flow from operating activities 30’937 26’299 Cash flow from investing activities (9
Slide 33: Summary Financial Results
3. Summary Financial Results ■ Operational profitability back to pre-crisis level ■ Net profit heavily impacted by reverse SOP costs ■ Significantly reduced SOP volatility in time (3 years) and value (10%) ■ Strong cash flow and balance sheet 33 2 June 2010
Slide 34: 4. Strategy and Outlook
4. Strategy and Outlook Paul Van Iseghem, President & CEO
Slide 35: Market Factors and Strategy
4. Market Factors and Strategy The strategy is confirmed ■ The domain of power electronics is robust and fast growing ■ With exception of the crisis, high CAGR of 12 to 14% ■ Our multi market approach evens out the extremes ■ Pure play components with LEM Inside strategy ■ Focus on operational excel
Slide 36: Market Factors and Strategy
4. Market Factors and Strategy ■ We are more than ever convinced that our business strategy and 4 strategic drivers for growth will give us an advantage in the present economy ■ The diversification of the markets will ensure to even out extremes of the different business cycles ■ We are setting up n
Slide 37: Outlook
4. Outlook ■ We are currently enjoying a very high bookings level, which is mainly coming from the traditional and robust drives market and from the renewable energy market, both wind and solar ■ We are also expecting a fast ramp-up of production for various projects in the Automotive segment ■ We h
Slide 38: 5. Succession of the CEO
5. Succession of the CEO Felix Bagdasarjanz, Chairman of the Board 38 2 June 2010
Slide 39: Changes in the Management
5. Changes in the Management ■ After 10 years with LEM Paul Van Iseghem will retire by the end of the year ■ Since the divestment of LEM Instruments in 2005, Paul Van Iseghem has been leading the company successfully during an impressive phase of profitable growth and shareholder value creation ■ To
Slide 40: Changes in the Management
5. Changes in the Management ■ François Gabella will assume the role of CEO of LEM starting July 1, 2010 ■ Born in 1958 he is Swiss national graduated from EPFL with an engineering degree in microtechnics and holds an executive MBA from IMD, International Institute for Management Development ■ Franç
Slide 41: 6. Proposals for the Shareholder’s Meeting
6. Proposals for the Shareholder’s Meeting Felix Bagdasarjanz, Chairman of the Board
Slide 42: Proposals for the Shareholder’s Meeting
6. Proposals for the Shareholder’s Meeting ■ The Board of Directors will propose the payment of an ordinary dividend of CHF 5.00 per share ■ In view of the positive outlook for further profitable growth of the company and of the significant potential to increase the financial leverage in the balance
Slide 43: Proposals for the Shareholder’s Meeting
6. Proposals for the Shareholder’s Meeting ■ Following the recommendation of LEM’s second largest shareholder, 7-Industries Holding BV, the Board of Directors proposes the election of Dr. Ilan Cohen as a new Director ■ Israeli and Belgian national, Ilan Cohen is President and CEO of the Israel based
Slide 44: Proposals for the Shareholder’s Meeting
6. Proposals for the Shareholder’s Meeting Amendment to the Articles of Incorporation of LEM Holding SA ■ Mr. Werner O. Weber who presently owns 27.4 % of LEM’s share capital (including through WEMACO Invest AG) has requested to include in the articles of incorporation of the company an opting-out c
Slide 45: Financial Calendar
6. Financial Calendar Financial calendar 25 June 2010 Ordinary Shareholders’ Meeting 5 August 2010 Q1 2010/11 results 9 November 2010 Q2 2010/11 results 15 February 2011 Q3 2010/11 results 9 June 2011 Full year 2010/11 results 1 July 2011 Ordinary Shareholders’ Meeting For further information Suzann