Q1 Results 2011/12

9 August 2011

Agenda
1. LEM at a Glance
2. Business Review
3. Financial Review
4. Strategy and Outlook

2
Q1 2011/12 results, 9 August 20111

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 industrial
and automotive applications.
■ LEM is a high growth global company with approximately 1’300 employees.
Production plants are in Geneva (Switzerland), Beijing (China), Machida(Japan), Copenhagen (Denmark). Regional sales offices are close to theclients’ locations.
■ LEM (SIX: LEHN) has been listed on the SIX Swiss Exchange since 1986
and has a market cap of CHF 666 million per 30.6.2011.

3
Q1 2011/12 results, 9 August 2011

1. LEM Production & Logistics World-WideProduction Centers (PDCs)
Adaptation Centers
Sales Offices
Agents / Distributors
4
Q1 2011/12 results, 9 August 20112

1. LEM at a Glance - Businesses
Industry segment

Automotive segment

Drives & welding

Conventional cars

Motor drives■ Welding■ Miscellaneous■■Battery management

Green cars (HEV, EV)

Renewable energies& power supplies■■

Battery management
Electric motor control

SolarWind■ UPS■ Battery monitoring, processcontrol, energy metering■■Traction
On-board applications
Trackside■ Energy monitoring■■High precision■■

Medical scanner
Test & measurement5

2. Highlights and Business Review

6
Q1 2011/12 results, 9 August 20113

2. Highlights Q1 2011/12
Q1 2011/12

in CHF millions

Orders

49.6

Sales
Operational EBIT
Net earnings

Q1 to Q1 2010/11 Q1 to Q4 2010/11-47.1%-28.0%

67.7

1.3%-12.6%

11.6-15.5%-19.6%

7.2-12.2%-41.5%■

Significant decrease of bookings■

General slow down in the market and volatile solar market■

Strong drives and traction businesses; stable Automotive■

Financial results impacted by strong Swiss franc■

Operating EBIT margin well within target range
7

Q1 2011/12 results, 9 August 2011

2. Net Sales
CHF millions

Sales

300

Q1 vs. Q1

Q1 vs. Q4

275

Industry

61.9

0.6%

-12.2%

250

Automotive

57
5.7

9 8%
9.8%

-16.5%
16 %225

Total sales

67.7

1.3%

-12.6%(in CHF million)

200
175

■

Sales significantly decreasing vs. Q42010/11■Decrease mostly outside of Asia region

150
1251007550250
2007/08

2008/09

2009/102010/11

Q1 2011‐128

Q1 2011/12 results, 9 August 20114

2. Quarterly View
In CHF millions

Book‐to‐bill ratio

10090■ Bookings significantly impacted
by foreign exchange (orderbook restated at new rates)

1.4

80

75.0

77.0

77.4
67.7

66.8

70

48.3

50

1.2
1.0

58.4

6040

■ Q1 book-to-bill ratio 0.73

1.6

■ Increased exposure to therenewable energy businessresults in more volatile bookings
for LEM

0.8

43.2
35.6

0.6300.4■ Stocking effects

200.2100■ Bookings impacted by global
uncertainties

0.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
09/10 09/10 09/10 09/10 10/11 10/11 10/11 10/11 11/12
Orders received

Sales

Book-to-bill ratio

9Q1 2011/12 results, 9 August 2011

2. Industry Segment: Regional Markets
Sales

2%

Q1 vs. Q4 Q1 vs. Q1(in CHF million)

Europe and Russia
Europe31.9-15.8%

-3.1%

Asia

N. America

7.3-19.3%

6.8%

Rest of the World

Asia

21.2-3.7%

2.9%

ROW

1.5-1.3%

26.5%

Total

61.9-12.2%

0.6%

North America

34%

53%

Declining sales in Europe mainly
due to volatile solar markets

Increasing importance of Asianmarkets

12%

10Q1 2011/12 results, 9 August 20115

2. Industry Segment: Business Development
Businesses and Applications
CHF millions

Op. EBIT in % of sales
25300

Drives and Traction
Growth in local currencies across allregions
regions.

260
20220

180

15140
10100

Renewable energies
Continued slowing performance vs Q4
2010/11, mainly in Germany, Italy andChina.
High precision
Slowed down due to postponed projects
andad cuscustomers’o e s sstockoc adjus
adjustments.
e s60
520‐2007/08

08/09

09/10

2010/11 Q1 2011‐12 011Q1 2011/12 results, 9 August 2011

2. Automotive Segment: Regional Markets
Sales

Q1 vs. Q4 Q1 vs. Q1(in CHF million)

12%

36%

Europe0.6-34.2%-25.3%

N. America
Asia andRoW
Total

3.1-19.6%

26.8%

2.0-3.8%

2.1%

5.7-16.5%

9.8%

Europe and Russia

Increased market share with key
customers in Japan for battery
management for conventional carsNew platforms will be launched inQ2 2011/12 in North America forbattery management forconventional cars

North America
52%

Asia and Rest ofWorld12
Q1 2011/12 results, 9 August 20116

2. Automotive Segment: Business Development
Businesses and Applications
CHF millions

Op. EBIT in % of sales

2525

2020

1515

101055

Conventional cars
New platforms for battery management to bel
launched
h d iin Q2 iin N
Northth AAmerica.
iGreen Cars (HEV, EV)
Majority of green cars shown at world carshows are designed with LEM transducers.
Success with new, better performing sensors
for new hybrid car platforms.

0007/08

08/0909/10

2010/11

Q1 2011‐12‐5-5‐10-10‐15-1513

Q1 2011/12 results, 9 August 2011

2. Business Development ChinaProduction■
LEM China expands its #1 position aslargest manufacturing site of the Group(40% of total)■“MadeMade by LEM”
LEM qualitySales■■

Year-over-year sales stable
Market share >50%

CHF millions

CHF millions

55120

45

100

80

3560
2540
1520
50
‐507/08

08/09

09/10

10/11

Q1 2011/1207/08

08/09

09/10

10/11

Q1 2011/12
14

Q1 2011/12 results, 9 August 201173. Financial review

Q1 2011/12 results, 9 August 2011

3. Income Statement
In CHF thousands

Q1
2010/11Var.

Q4
2010/11Var.

Q1
2011/12

Sales

66’786+1.3%

77’379-12.6%

67’659Gross margin %43.6%-1.2 ppt

40.9%+1.5 ppt

42.4%

Operating costs(15’413)+11.0%(17’752)-3.7%(17’101)

Operational EBIT

13’735-15.5%

13’912-16.6%

11’600Additional SOP income/costs

(388)

EBIT

13’347

Net financial expense(1’668)

Income taxes(3’469)Net profit

8’210

(468)
-14.0%

13’444(121)

162(2’339)(1’281)-12.2%

12’325

11’479-14.6%(1’928)7’212-41.5%
16

Q1 2011/12 results, 9 August 20118

3. Results by Quarter
In CHF millions% of sales
30%

10090
75.0

807048.3

5025%

77.4
67.7

66.8

604077.0

58.4

43.2

20%
15%

■ Op. RoS stays well within target
range

10%

■ Tax charge stays on low level

35.6

305%

200%

100

■ Continued slowing trend inorders■ Net profit is still impacted byadditional stock option plancost. This legacy program will
run outt ini 03/2012

-5%
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
09/10 09/10 09/10 09/10 10/11 10/11 10/11 10/11 11/12
Orders received

Sales

Op. ROSNet Profit in % of sales
17Q1 2011/12 results, 9 August 2011

3. Gross Margin Development
CHF millions% of sales
48%

13547%
120

Gross margin

Q1
2010/11Q4
2010/11

Q1
2011/12

29.1

31.7

28.7

43.6%

40.9%

42.4%

in CHF million

Gross margin
In % of sales

46%

10590

45%

7544%

60

43%

4542%
30

■ Compensation of strongly negative
exchange rate developments on thegross margin Q1 by natural hedging
hedging,
product mix and cost cutting programs

41%

1540%

007/0808/0909/10

2010/11

Q1
2011/1218

Q1 2011/12 results, 9 August 201193. Operating Expenses
CHF millions% of sales

Operating expenses
4520%

in CHF million

4018%

Operating expenses

3516%

3014%

2512%

2010%

158%

106%

54%

0

in % of sales

Q1
2010/11

Q4
2010/11

Q1
2011/12

15.4

17.4

17.1

23.1%

22.5%

25.3%

■ Required structure finalized■ Operating expenses as a percentage ofsales remain on low levels compared tohistory (avg(avg. 29%)

2%
07/08

08/09

09/10

2010/11

Q1
2011/1219

Q1 2011/12 results, 9 August 2011

3. Operational EBITCHF millions% of sales

7025%

Operational EBITin CHF million

Operational EBIT

6020%

in % of sales

Q1
2010/11

Q4
2010/11

Q1
2011/12

13.8

14.3

11.6

20.6%

18.5%

17.1%

5015%

4030

■ Excluding additional SOP cost/income10%■ Exceptionally good profitability in2010/115%■ Maintained satisfactory op. EBIT margin
in Q1

20

10

00%
07/08

08/09

09/10

2010/11

Q1
2011/1220

Q1 2011/12 results, 9 August 2011103. Financial Expense
Q1
2010/11

Q4
2010/11

Q1
2011/12

Exchange effecteffect*(1’602)(1602)(354)(2’309)(2309)

Other financial expense + income

(66)

0(30)

Total

(1’668)(354)(2’339)In CHF thousands Exchange effect mainly driven by EUR and USD devaluation
 Hedgingg gp
policy:y 50% of net exposure
pon a rollingg 3-9 month basis* The line “exchange effect” in the financial result is mainly due to currency volatility during the time between booking andsettling a receivable/payable. Over and above this line, foreign exchange rates impact every P&L line through the rate at
which each transaction is booked and at which it is consolidated into CHF.
21
Q1 2011/12 results, 9 August 2011

3. Net Profit
CHF millions% of sales

4518%

4016%
14%

3012%

2510%

208%

156%

104%

Q4
2010/11

Q1
2011/12

8.2

12.3

7.2

12.3%

15.9%

10.7%

Net profit
in CHF million

Net profit
in % off sales

35

Q1
2010/11

Q1 2010/11
- 0.4
- 1.7
13.7

- 3.5
8.2

Operational
EBIT

SOP inc./cost

FinancialexpenseIncome tax

Net profit

Q1 2011/12
- 0.1

52%

00%
07/08

08/09

09/10

2010/11

Q1
2011/12- 2.3

11.6

OperationalEBIT- 1.9

SOP inc./cost

Financialexpense

Income tax

7.2
Net profit
22

Q1 2011/12 results, 9 August 201111

4. Strategy and Outlook

Q1 2011/12 results, 9 August 2011

4. Market Factors and Strategy■ We firmlyy believe in our strategicg
direction and the 4 drivers for ourbusiness remain unchanged■ We will continue to capitalize on thedrivers of LEM’s markets through■ pure play components company■ diversification across geographiesand markets

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Q1 2011/12 results, 9 August 201112

4. Outlook■ For 2011/12 we expectour drives business to remain robust
a possible rebound of the renewable business later in the year
■ a ramp-up of production for various projects in the Automotive segment■ increasing competitive pressure■ global economic uncertainties to persist■ The instability of exchange rates will continue to impact business■■25
Q1 2011/12 results, 9 August 2011

Financial Calendar and Contact Details
Financial calendar
8 November 201114 February 2012
6 June 201228 June 2012

Q2 results
Q3 results
Year end results media and analyst conferenceYear-end
Ordinary shareholders’ meeting for the year 2011/12

For further information
Julius Renk
CFO
Tel: +41 22 706 12 50
Email: investor@lem.com

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Q1 2011/12 results, 9 August 201113