LEM Holding SA · SIX:LEHN
LEM Holding SA — Q3 2014/15 Earnings Presentation
34 slides from LEM Holding SA's earnings presentation, Feb 17, 2015
Slide 1: Results 3rd quarter of 2014/15
Results 3rd quarter of 2014/15 1 October 2014 to 31 December 2014 17 February 2015
Slide 2: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 2
Slide 3: Global Market Leader in Current and Voltage Transducers
1. Global Market Leader in Current and Voltage Transducers Market Position Performance Perspectives Source: Swissquote 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
Slide 4: LEM Applications: Robot
1. LEM Applications: Robot Industrial robots require movements in 3-6 axes in order to move the end of the arm in every position. Applications are accomplished with high endurance, speed and precision. The robot arm is moved by electrical motors: usually one motor for each axis. The power inverter (
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: Locomotive
1. LEM Applications: Locomotive Inverters (3) are used to transform the energy into the right voltage and current to drive the motors (4). Voltage and current transducers (A,B) are used to measure the current and the voltage on the secondary side of the A LTC 100 B DVL 1 transformer (2) and on the D
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 9M of 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 p
Slide 9: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 9
Slide 10: Highlights Q3 of 2014/15: High Operating Margins
2. Highlights Q3 of 2014/15: High Operating Margins In CHF millions, % 9M 2014/15 9M 2014/15 vs. Q3 2014/15 vs. 9M 2013/14 Q2 2014/15 Orders 190.4 +4.1% +3.0% Sales 196.2 +6.3% -2.6% EBIT 43.9 +4.2% -11.0% Net profit 33.1 +0.0% +8.2% ■ Effective strategy execution turning into tangible results ■ Sal
Slide 11: Net Sales
2. Net Sales In CHF millions In CHF millions, % 300 Sales 9M vs. 9M Q3 vs. as at constant Q2 275 reported currencies 250 Industry 169.5 +7.1% +9.1% -1.9% 225 Automotive 26.7 +2.1% +3.8% -6.7% 200 Total sales 196.2 +6.3% +8.4% -2.6% 175 ■ Seasonal effects in Industry in Q3 less 150 pronounced than ex
Slide 12: Quarterly View
2. Quarterly View In CHF millions Book-to-bill ratio 80 1.2 Seasonal recovery in 70 64.7 bookings in Q3 63.1 65.1 65.0 66.5 61.8 61.1 1.0 Customers’ requested 61.1 60 55.0 55.8 57.6 lead times and stock 50 0.8 levels continue to trend downwards 40 0.6 30 0.4 20 0.2 10 0 0.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 13: Industry Segment: Regional Markets
2. Industry Segment: Regional Markets In CHF millions, % Europe Sales Growth Growth North America 9M vs. 9M Q3 vs. Q2 Asia and ROW 42% Asia and 80.0 +15.9% +3.5% RoW Europe 71.5 +3.5% -8.1% 47% N. America 18.0 -11.0% -0.2% Total 169.5 +7.1% -1.9% Challenging economic environment in Europe North
Slide 14: Industry Segment: Business Development
2. Industry Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 25 280 Drives & welding (growth Q3 vs. Q2: -7%) Transfer of customers’ production to Asia 240 20 Impact from seasonal factors and weak European economy 200 Renewable energies & power supp
Slide 15: Automotive Segment: Regional Markets
2. Automotive Segment: Regional Markets Europe In CHF millions, % Sales Growth Growth North America 9M vs. 9M Q3 vs. Q2 Asia and Rest of World 7% Asia and 11.7 +16.6% +1.9% RoW 44% Europe 1.9 -18.3% +7.2% N. America 13.1 -5.1% -15.8% Total 26.7 +2.1% -6.7% Focus on Asian and North American markets
Slide 16: Automotive Segment: Business Development
2. Automotive Segment: Business Development In CHF millions Op. EBIT in % of sales Businesses and Applications 40 25 Conventional cars (growth Q3 vs. Q2: -10%) International car makers reducing production 35 and inventories before year-end 20 30 Green cars (HEV, EV) (+10%) 25 Small project wins
Slide 17: 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 27% of (58% of total production, compared to total sales 57% in financial year 2013/14) ■ “Made by LEM” quality In
Slide 18: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 18
Slide 19: Financial Highlights Q3 and 9M of 2014/15
3. Financial Highlights Q3 and 9M of 2014/15 Seasonal decrease in sales in Q3 of 2014/15 Maintained strong cost discipline Application of new CN-CH double taxation agreement resulting in reversal of withholding tax provision Robust profitability 19
Slide 20: Income Statement
3. Income Statement In CHF millions 9M 9M Change Q2 Q3 Change 2013/14 2014/15 2014/15 2014/15 Sales 184.5 196.2 +6.3% 66.5 64.7 -2.6% Gross margin 46.5% 46.3% -0.2pt 47.4% 46.2% -1.1pt Operating expense -43.6 -47.0 +7.6% -15.4 -15.6 +1.3% EBIT 42.1 43.9 +4.2% 16.0 14.3 -11.0% Net financial exp. -1.6
Slide 21: Results by Quarter
3. Results by Quarter In CHF millions In % of sales 80 30% Seventh consecutive 63.1 61.1 61.8 65.1 65.0 quarter with EBIT 70 66.5 25% 55.0 55.8 61.1 64.7 margin above 20% 57.6 60 20% Stable profitability 50 Q4 of 2012/13 included 15% 40 a restructuring charge of 10% CHF 1.9 million 30 5% 20 10
Slide 22: Gross Margin
3. Gross Margin In CHF millions In % of sales 140 48% 9M 9M Q2 Q3 2013/14 2014/15 2014/15 2014/15 47% 120 Gross margin 85.8 90.8 31.5 29.9 46% in CHF millions 100 45% Gross margin 46.5% 46.3% 47.4% 46.2% in % of sales 44% 80 43% Gross margin in line with last years' 60 42% margin, in accordance wi
Slide 23: Operating Expense
3. Operating Expense In CHF millions In % of sales 9M 9M Q2 Q3 70 30% 2013/14 2014/15 2014/15 2014/15 Operating 60 43.6 47.0 15.4 15.6 25% expense in CHF millions 50 Operating 20% expense 23.6% 23.9% 23.2% 24.2% in % of sales 40 15% 30 Higher administration expense driven by LEM Bulgaria developme
Slide 24: R&D Expense
3. R&D Expense In CHF millions In % of sales 9M 9M Q2 Q3 2013/14 2014/15 2014/15 2014/15 16 8% R&D 14 7% expense 10.9 11.1 3.5 3.7 in CHF millions 12 6% R&D expense 5.9% 5.6% 5.3% 5.7% in % of sales 10 5% 8 4% Maintained high investment in R&D for both segments 6 3% Ongoing renewal of product ra
Slide 25: EBIT
3. EBIT In CHF millions In % of sales 9M 9M Q2 Q3 60 26% 2013/14 2014/15 2014/15 2014/15 24% 50 EBIT 42.1 43.9 16.0 14.3 22% in CHF millions 20% EBIT 40 in % of sales 22.8% 22.4% 24.1% 22.1% 18% 30 16% Continued cost control and high gross 14% margins 20 12% Profitability above target range of 1
Slide 26: Financial Expense
3. Financial Expense In CHF millions 9M 9M Q2 Q3 2013/14 2014/15 2014/15 2014/15 Exchange effect* -1.6 -3.2 -2.0 -1.3 Other financial expense & -0.0 -0.0 +0.0 -0.1 income Total -1.6 -3.2 -2.0 -1.4 9M 2014/15 exchange effect mainly driven by hedge losses following appreciation of CNY and USD vs. CH
Slide 27: Income Taxes
3. Income Taxes 9M 9M 2013/14 2014/15 Expected income tax rate 16.1% 20.0% Expected withholding tax rate 1.9% 1.4% Expected tax rate 18.0% 21.3% Adjustment in respect of previous period’s income tax 0.5% -3.3% Other differences -0.3% 0.4% Effective tax rate 18.1% 18.5% Higher expected tax rate due
Slide 28: Net Profit
3. Net Profit 9M 9M Q2 Q3 In CHF millions In % of sales 2013/14 2014/15 2014/15 2014/15 Net profit 33.1 33.1 10.8 11.7 in CHF millions 50 20% Net profit 18.0% 16.9% 16.2% 18.0% 45 in % of sales 18% 40 9M 2013/14 16% -1.6 35 -7.3 14% 42.1 30 33.1 25 12% EBIT Financial expense Income tax Net profit 20
Slide 29: Agenda
Agenda 1. LEM at a Glance 2. Highlights and Business Review 3. Financial Review 4. Strategy and Outlook 29
Slide 30: 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 30
Slide 31: Outlook
4. Outlook ■ Financial year 2014/15 outlook ■ Sales of CHF 250 to 260 million ■ EBIT about CHF 54 million ■ Swiss franc appreciation vs. major currencies ■ LEM expects a negative currency impact on EBIT of CHF 3 million in Q4 of 2014/15 ■ LEM to benefit from its established foreign exchange hedging
Slide 32: Organization Change
Organization Change ■ After 6 successful years as CFO at LEM, Julius Renk has decided to leave the Company ■ Transition to new CFO ■ Julius Renk to assume full responsibility for LEM’s financial year 2014/15 closing ■ Julius Renk to support the Company in the transition of the CFO responsibilities ■
Slide 33: Q&A
Q&A At the heart of power electronics
Slide 34: Financial Calendar and Contact Details
Financial Calendar and Contact Details Financial calendar 4 June 2015 Year-end 2014/15 results 25 June 2015 Ordinary Shareholders’ Meeting for the financial year 2014/15 30 June 2015 Dividend ex-date 2 July 2015 Dividend payment date For further information Julius Renk, CFO Phone: +41 22 706 12 50 E