Annual Review
19 | 20

Contents

Streams of steady, safe, uninterrupted electric flow keep us
plugged in, on line, up and running. This would be not be
possible without electric sensors. LEM products help encourage
renewable energy and provide continuous power supply,
to ensure the connectedness that improves our quality of life.
LEM develops sensors that meet the most demanding standardsof accuracy and safety and engineers a range of compact
semiconductor-based sensing solutions. A sustainable future
depends on sensors for smart grids, microturbines, wind andsolar power for affordable and clean energy.

4

Welcome6

Leading the world8

Financial results

12

Industry segment performance18

Automotive segment performance

24

Auto sector transformation

30

Trends, technology, R&D

36

Culture, talent & values

46

Board of Directors

48

Our core values

49

Responsibility

52

Information for investors

Sensor solutions play a role in our everyday lives: in trains,
trams, buses, conventional cars, green cars, elevators. With ourstrong heritage of nearly 50 years as market leaders, LEM
is at the forefront of best-in-class and new sensors for mobility
applications that provide us with safe, reliable motion.

Financial Report download PDF→ www.lem.com/en/investors

Welcome

As we write this introduction to our
Annual Review in April 2020,
the world is a very different placefrom even January. All of you will
have been impacted professionallyand personally by the pandemicof Covid-19 sweeping across theplanet. We sincerely hope thatyou are adjusting to and coping withthis extra-ordinary challenge.
At LEM we are focusing on threepriorities for our employees: staying
safe and taking care of our families;
keeping our everyday business as
steady as possible; reassuring ourcustomers and suppliers that weare reliable and responsive to their
new demands.

Despite this difficult environment, it is important toremember the fundamental long-term prospects for
LEM remain strong, driven by mega trends such asenergy efficiency, mobility and automation. LEM
benefits from the diversity of our business acrosssectors and regions, with recognized heritage andmarket leadership, a steady flow of orders, robust margins, a strong balance sheet and healthy cash flow.

best solutions. We are investing resources in development programs and coaching sessions to help
talents grow and shape our future. In 2019 welaunched a global program – our Culture Journey –that will help all our people significantly improve individual performance, team collaboration and thus
results of the whole organization. Our goal is to further develop a High-Performance Culture.

Steady flow
The theme of this year’s document is “steady flow”.
For LEM the power of “streams of steady, safe, uninterrupted electric flow” is core to its existence. It iswhat keeps the business plugged in, on line, up andrunning. Ensuring that our electrical sensors are inplace and in demand. Not only is it essential to qualityof life today, but also to the DNA of the LEM brand.

R&D investments deliver new products
We continued to allocate substantial resources in
R&D to assure long-term growth, with investments of
CHF 28.0 million or 9.1% of sales for 2019/20. Ourinvestments are split into near-, mid-, and long-term
projects, such as developing building blocks for the
next decade. This is leading us from a traditional,
electromagnetic sensors company into a broadened
business of various integration levels. Our R&D teamprovides a diversified skillset to deliver the bestproduct. It is to our advantage that we produce forcustomers in the industry and automotive segments,
which allows us to leverage synergies to produce
larger systems, modules and semiconductors. Ourinvestment continues to bear fruit with another ten
products launched this year.

We continue to be a reliable partner for the industry
and automotive sectors; leading experts who listen,understand and provide innovative solutions to theirchanging needs. Our customers can depend on LEM,
no matter what economic and technological challenges they face. LEM has been a sector leader and partner for nearly 50 years. 2019-20 has been a year of
disruptive forces for LEM – trade wars, an auto sectortransforming towards software-backed electric vehicles, and then the Covid-19 pandemic. A steady flowof strengths enables LEM to overcome these obstacles and drives the organizational changes we aremaking to benefit from new opportunities.
Adapting the organization to capture growth
Far from being mature, the current sensor market isforecast to grow by about 8% CAGR. Products areundergoing significant mutations, driven by new applications and technologies.
We are making the organization more agile to ensure
we capture and manage this global growth. Our HQin Geneva, Switzerland is setting strategy and standards, leading innovation and coordinating all our
global sites; these are being empowered with skills
and decision making in R&D, operations, sales andquality control. During 2020 we announced a reorganization of certain operations in Geneva to reflect
this new allocation of global roles. LEM is made ofthe expertise, talent and leadership of the 1,500
people working relentlessly to bring customers the

LEM Annual Review 19 | 20

4

Pleasing financial results
We are pleased to report another year of steady results which are particularly encouraging given the
tough environment we have faced. Sales in the financial year 2019/20 totaled CHF 307.9 million, adecline of 4.2%, but down only 1.9% at constantexchange rates. EBIT decreased to CHF 58.3 million
from CHF 64.8 million, but our underlying EBIT margin of 19.6% remained robust. We posted the company’s best-ever net profit of CHF 60.7 million, although this was helped by a significant one-off
positive tax impact.
Our balance sheet remains largely debt-free and wecontinue to generate healthy cash flow. For the year
2019/20, the Board of Directors proposes a slightly
reduced dividend of CHF 40 per share, taking into
consideration the company’s financial strength andthe difficult economic environment.
Strategy on track
Mega trends drive demand for sensors, give multiple
opportunities to leverage LEM expertise and ensurea sustainable long-term business for all our stakeholders. We are focused on strengthening our technology leadership, improving our quality systems andoperational excellence, developing our talent capabilities and making the organization more agile. We
will build a new production plant in Malaysia to further de-risk our supply chain, diversify our footprint
and enhance our competences – this has beenplanned for some time and was announced in January 2020. In Geneva we are breaking ground on a
new headquarters building appropriate for modern
organizational roles and technologies.
Looking ahead, Covid-19 will undoubtedly impact ourcustomers and our business in the coming year.
Some factors remain out of our control, but the diversity of our global footprint across multiple sectors
and regions should stand us in good stead. We canalso take heart from how efficiently LEM’s China operations got back to work.
Thank you
On behalf of the entire Board of Directors and the
Executive Management, we thank shareholders forthe confidence they have placed in us. Special
thanks go to our employees worldwide for their expertise, reliability and innovative solutions. In particular we are very proud of how our teams have responded to the unprecedented challenges of recent
months, using their resilience and creativity to keep
delivering products and projects on time. We would
also like to extend our gratitude to our customers,
suppliers and business partners for their continued
trust, wishing you all good health and a successfulnavigation of the unprecedented challenges ahead.
We hope you enjoy this Annual Review and will appreciate the reliability of LEM’s “steady flow”, helping
our customers and society accelerate the transition
to a sustainable future.

Andreas Hürlimann
Chairman of the Board of Directors

Frank Rehfeld
Chief Executive Officer

5

LEM Annual Review 19 | 20

Customization

Production

R&D

Sales

Leading the world inelectrical measurement
EuropeGeneva, Switzerland
Frankfurt, Germany
Vienna, Austria
Brussels, Belgium
Randers, Denmark
Paris, France
Padova, Italy
Skelmersdale, UK
Lyon, France
Sofia, Bulgaria
China
BeijingShanghai
Shenzhen
Xian
Hefei
Taipei, Taiwan
North America
Milwaukee, Wisconsin
Columbus, Ohio
Amherst, Massachusetts
Los Angeles, LA

LEM headquarters
Geneva, Switzerland

Rest of world
Pune, India
Seoul, South Korea
Tokyo, Japan
Tver, Russia
Agents/Distributors

A leading company in electricalmeasurement, LEM engineers the bestsolutions for energy and mobility,
ensuring that our customers’ systems
are optimized, reliable and safe.

LEM Annual Review 19 | 20

6

Our 1,500 people in over 15 countries
transform technology potential into
powerful answers. We develop and recruit
the best global talent, working at
the forefront of mega trends such as
renewable energy, mobility, automationand digitization.

With innovative electrical solutions,
we are helping our customers andsociety accelerate the transition toa sustainable future.

7

LEM Annual Review 19 | 20

Financial results

Steady financial performance
Sales in the financial year 2019/20 totaled CHF 307.9
million, a decrease of 4.2% compared with the previous year. However, our reported top-line was impacted by the strength of the Swiss Franc and sales
only dropped by 1.9% at constant exchange rates.
This was a pleasing performance in the context ofthe global economic slow-down, the trade wars, andthe impact of Covid-19 on our operations, particularly in China. This sales performance is testament toour customers’ appreciation for our products, ourengineering expertise and our reliability as a partner.

In the financial year 2019/20, orders were slightly up
at CHF 322.4 million compared with CHF 320.5 million, reflecting solid demand in the Industry segment(+3.5%) while the Automotive segment (-8.8%) was
held back by the continued decline in conventionalcars and the first impact from Covid-19. The full year
book-to-bill ratio reached 1.05, up from 1.00.

LEM’s diversity of applications across multiple sectors of the global economy provides a steady flow oforders and a prudent spread of risk. We also benefit
from a good geographic spread of business. Chinaleads the way with 32% of total sales (33% in
2018/19), Europe 32% (33%), North America 12%(13%) and the rest of the world 24% (22%). Sales
declined in China (-7.2%), in Europe (-4.1%), in North
America (-13.5%), but increased notably in the restof the world (+5.8%).

We remain vigilant with overheads, although on a reported basis total SG&A costs have risen by 3.9% to
CHF 56.5 million, or 18.3% of sales compared with
16.9% last year. This increase reflects positive
non-recurring items in 2018/19 (e.g. global pension
adjustments) and negative non-recurring items thisyear (e.g. reorganization of employee functions in
Geneva). Without these items, SG&A costs would
have been slightly lower.

Our sales performance attests toappreciation for our products,
our engineering expertise and ourreliability as a partner.

Gross profit was down by 2.6% at CHF 142.7 million,
while the gross margin improved again to 46.4%.
This is 80 basis points better than in the prior year,
thanks to various efficiency programs.

We continued to increase investment in researchand development (R&D), up by 1.7% to CHF 28.0
million, or 9.1% of sales, up from 8.6%. Our investment continues to bear fruit with another ten products launched this year. This long-term strategy will
ensure LEM has the right new technologies and applications for customers, as their businesses are increasingly driven by renewable energy, mobility, automation and digitization.
EBIT for the year 2019/20 decreased to CHF 58.3
million from CHF 64.8 million, mirroring the decline inrevenues and increased costs discussed above. Our
reported EBIT margin was down at 18.9%, comparedwith 20.1%. On an underling basis, excluding theone-off reorganization costs in Geneva, the EBIT
margin was 19.6% in line with our guidance.

Key figures 2015/16 to 2019/20
in CHF millions

2015/162016/172017/18 1

2018/192019/20

Orders received

256.5

271.2

319.7

320.5

322.4

Book-to-bill ratio

0.98

1.03

1.06

1.00

1.05

Sales

261.5

264.5

301.2

321.6

307.9

Gross margin

120.4

123.6

138.9

146.5

142.7

46.0%

46.7%

46.1%

45.6%

46.4%

In % of sales
EBIT
In % of sales

63.1

64.8

58.3

21.0%

20.1%

18.9%

43.5

44.6

54.4

52.4

60.7

EPS basic (CHF)

38.18

39.11

47.76

45.97

53.27

Dividend per share (CHF)

35.00

35.00

40.00

42.00

40.00 2

Operating cash flow

45.6

52.8

54.1

53.5

73.6

Investing cash flow

–6.6

–13.2

–15.1

–14.8

–14.7

31.3.201631.3.201731.3.2018 1

31.3.2019

31.3.2020

Net financial assets / (liabilities)

13.6

12.8

12.6

4.5

10.2

Shareholders’ equity

85.9

90.5

111.6

113.1

117.4

In CHF millions,%

Equity ratio (in % of assets)

61.3%

60.7%

60.0%

60.5%

51.0%

Market capitalization

929.1

1’064.8

1’812.6

1’459.2

1’210.7

Employees (in FTEs)

1’388

1’453

1’527

1’477

1’497

1 Restated financial statements
2 Proposal of the Board of Directors to the Annual General Meeting of Shareholders on 9 June 2020.

Sales per segment

Regional sales breakdown

in CHF millions

in CHF millions

250

100

200

80

150

60

100

40

50

20

15/16

16/17

Automotive segment

8

55.8
21.1%

Net profit for the year

0

LEM Annual Review 19 | 20

52.9
20.2%

17/18

18/19

Industry segment

19/20

0

15/16

China

16/17

Europe

17/18

18/19

North America

9

19/20

Rest of world

LEM Annual Review 19 | 20

Financial results

Net financial income shows a deficit of CHF 2.7 million, due to foreign exchange losses on hedges andopen balance sheet positions. The Group tax expenses was a positive CHF 5.1 million, mainly due toa non-recurring positive tax impact of CHF 14.0 million from the sale of technical IP from LEM Intellectual Property SA based in Fribourg to LEM International SA based in Geneva and to LEM China.
We posted a record net profit for the year of CHF
60.7 million, up from CHF 52.4 million last year. The
net profit margin thereby increased to 19.7% compared with 16.3%. Excluding the positive tax impact,
net profit would have decreased to CHF 46.7 million,
while the net profit margin would have declined to15.2%.

46.4 %
Gross margin

28.0
R&D investments
9.1% of salesm

60.7 mCash flow from operating activities was CHF 73.6 million (+37.5%) and free cash flow was CHF 58.9 million (+51.8%). This increase is a consequence ofbetter net working capital management and lower
taxes paid.

Given the inter-connectedness of customer demandand supply chains, and where LEM sits in this complex global web, we will not have any real visibility on
the impact to our business until the second quarterof our financial year 2020/21.

Our balance sheet remains strong and essentiallydebt-free. As of 31 March 2020, total assets increased to CHF 230.3 million. Shareholders’ equity
reached CHF 117.4 million, representing an equity ratio of 51.0% (60.5% as of 31 March 2019).

Despite this difficult environment, it is important toremember the fundamental long-term prospects for
LEM remain strong, driven by mega trends such as
renewable energy, mobility and automation. LEM
benefits from the underlying reliability of our business across a global footprint, with recognized heritage and market leadership, a steady flow of orders,robust margins, a strong balance sheet and healthy
cash flow.

Adjusted dividend
Based on the results for 2019/20 and the uncertain
outlook, the Board of Directors proposes a reduced
dividend of CHF 40 per share (CHF 42 for 2018/19),
payable on 18 June 2020. The proposal follows
LEM’s dividend policy of distributing significantly
more than 50% of its consolidated net profit toshareholders and corresponds to a payout ratio of
75.1%, down from 91.4% last year.
Uncertain outlook
The dramatic impact of Covid-19 on the world economy has been well reported. The IMF published its
bi-annual World Economic Outlook in April 2020; thisforecast a baseline decline of -3% for global GDP in
2020, with only China and India showing any positive
growth, and the aftershocks to be felt even into
2022. This baseline is predicated on most major
economies moving out of lockdown by the end of Q22020, so actual GDP could be even worse if the pandemic persists.
LEM’s business does benefit from geographic andsector diversity. Our operations in China (accounting
for 32% of sales and 60% of production) were backup and running nearly at full capacity by the end of
March 2020. However, a substantial portion of our
China production is destined for export, and therefore is dependent on how quickly demand picks up
from other economies which have been hit badly by
the virus.

LEM benefits from robust
margins, a strong balance
sheet and healthy cashflow.

We are maintaining our key projects of investing in a
new production plant in Malaysia and a new global
headquarters in Geneva. We continue to invest in
R&D at between 8-10% of sales, leveraging newtechnologies for example in electric powertrains,smarter sensors, DC metering and charging systems.
We continue to improve the efficiency of production,
while also empowering our global sites with full capabilities in R&D, operations, sales and quality management. This will make our organization more agile,increase our speed of execution and reduce the time
to market.
In summary, we will focus on those matters under ourown control, ensuring the business is run as efficiently as possible. While confident in LEM’s corequalities of engineering expertise and reliability, witha proven track record of nearly 50 years, we recognize the Covid-19 impact on the global economy andsocieties will leave certain drivers for our short-term
prospects out of our hands.

Net profit
19.7% of sales

LEM Annual Review 19 | 20

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LEM Annual Review 19 | 20

Industrysegment
performance
A reliable steady partner, we continually reinforce
strategic alignment with key players and trend
setters in our industry, adapting to significant
and accelerating changes across markets. The
Industry segment delivered a steady performanceagainst a difficult global economic backdrop.
We maintain significant market share in our chosenbusiness segments.

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LEM Annual Review 19 | 20

Industry segment
performance

Solar inverter

Global industry market –difficult conditions
In 2019 global economic growth was at its weakest
since the financial crisis of 2007-9. Rising trade barriers and associated uncertainty weighed heavily on
business sentiment and activity. Firms turned cautious on long-range spending, purchases of machinery and equipment decelerated, and industrial production was scaled back. Global trade slowed to a
standstill (source: IMF).
The beginning of 2020 saw the first wave of economic impacts from the Covid-19 pandemic. The JPMorgan Global PMI dropped by a record 6.1 points in
February and another 6.7 points in March, the worst
decline since October 2001. Manufacturing output
declined sharply due to slumping demand, personnel
shortages, supply constraints and forced closures.
March 2020 also witnessed the biggest drop in global manufacturing new orders for 11 years. The only
bright spot was a rebound in China’s PMI from 27.5 in
February to 46.7 in March, although the sub-50 reading meant that output continued to decline (source:
IHS Markit).
Against this difficult global economic backdrop, theIndustry segment delivered a steady performance,
indeed one could say better than expected given thecircumstances. We maintain significant market sharein our chosen business segments.
We are adapting to important and accelerating changes across markets, such as higher power densities,
the electrification of mobility, digital disruption, smart
grids and distributed energy resources.
LEM delivers steady performance
Sales in the Industry segment decreased by 3.9% to
CHF 240.4 million in the financial year 2019/20; atconstant exchange rates the sales decrease was
1.3%, so the negative FX impact was CHF 6.5 million
due to the strong Swiss Franc. Orders improved by
3.5% to CHF 254.3 million, resulting in a full year
book-to-bill ratio of 1.06. The economic environment
differed across regions. Sales in China were up by
0.2%, mainly due to good performance in traction
and the solar business, and China remains our mostimportant single country, representing 30.4% of Industry sales. Sales in North America decreased by

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14

8.9%, mainly due to differences between 2018-2019
in applications of trade tariffs on certain products
while in Europe sales dropped by 5.6% principally
because of a weak drives market. Rest of the worldsales decreased by 3.8%, but sales in India performed well. EBIT decreased from CHF 54.9 million
to CHF 50.4 million while the EBIT margin slightly
dropped from 21.9% to 21.0% due to the sales drop.
Drives and welding
Sales in the drives and welding business dropped
significantly by 12.2% to CHF 99.6 million, principally due to the delay of industry sector investment in
China, and a decline in machine tools demand in Japan and Germany. Automation and energy savings
applications are the main growth drivers for our sales.
We continue to receive very positive feedback on
the introduction of our new product family with integrated current sensors for small drives and robotics.

Every house with a photovoltaic system needs
an inverter to convert the solar DC electricity
into AC electricity.
LDSR measures AC and DC leakage currents intransformerless photovoltaic systems to ensure
the safety of people and installations. Primarily
used on the DC side of the inverter, HMSR SMS
measures AC & DC currents with high accuracy
and high immunity to external interference. LZSR,
primarily used on the AC side, measures evenhigher peaks of AC current.

Renewables
Sales in the renewables business grew by 2.2% toCHF 78.7 million with customers from the Chineseand European solar industry producing for the world
market. We grew strongly in China while sales in Europe and the US were stable. LEM is doing well in thisvery competitive market thanks to the launch of new
products which address the changing requirementsof solar inverters. Wind activity remained weak inmost regions. We continue to build a pipeline ofsmart grid projects and won some designs with new
products.

DC

Traction
We enjoyed another successful year, with traction
sales up by 5.1% to CHF 51.0 million thanks mainly tothe continued infrastructure investments in India andWestern Europe. We achieved strong sales with lightrail and locomotive projects as well as energy metering and track-side maintenance projects. We also
continue to benefit from higher investments in Eastern Europe and Russia, while the US market remains
very weak.

LDSR 0.3-NP

AC
DC

AC

Solar inverter

HMSR 30-SMS

LZSR 150-P

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LEM Annual Review 19 | 20

Industry segment
performance

DC fast charging stationfor electric vehicles

High precision
In the project-driven high-precision business, sales
declined by 2.2% to CHF 11.1 million, although we
had good growth in Japan and Western Europe due
to green cars test bench applications. Our new product line (IN family) continues to be well received bycustomers thanks to its superior performance.
Moving into new markets
As market leader, we continue to invest in new businesses where we can leverage our strong heritage inindustry applications.
We have successfully trialed and are launching our
new DC meter product for use in charging green
cars. DCBM offers a high level of integrated functions, with a reliable and certified solution for billingelectricity for fast charger users.
In the smart grid business, ourlow voltage market share
growth will be supported by
the launch of the new AI-P1A
Rogowski integrator and ARU
outdoor Rogowski sensor. We
offer a broad variety of secondary cables and connectors. In 2020 we will enter thehighly promising medium voltage switchgear businessthanks to quick development
initiatives.

Industry sales
2019/20

CHF 240.4
millionDrives and welding
Renewables
TractionHigh precision

LEM Annual Review 19 | 20

99.6 m
78.7 m51.0 m11.1 m16

LEM accelerated its efforts for
integrated current sensors(ICS) by launching the HMSR,a miniature current sensor
manufactured on semiconductor processes. Together with
the GO series of chip-based
sensors, the HMSR is enabling
our customers to develop
smaller and better systems. It
also allows us to penetrate
new low-power, high-volume
applications such as chillers
and air conditioners.

LEM organization – a reliable steady partner
At LEM we pride ourselves on being a reliable steadypartner for our customers, across all phases of a project,
wherever and whenever the customer needs our products and expertise.
We continuously strive to achieve and reinforce strategic alignment with key players and trend setters in
our industry. This includes technical product roadmap
synchronization, but also the implementation of advanced and most efficient logistic processes forseamless delivery around the world to guarantee best
service levels and timely delivery at best cost.

DC fast chargers provide power to the car battery
directly and quickly, which is essential for
convenient long distance driving and for fleets.
The AC/DC power module enables the conversion
from alternative current to a direct current.
Sensors ensure the control loop function which
regulates the stability and power of power
modules.

An intense technical cooperation with our key customers from an early project phase onwards is essential to obtain best fit to market, to align our common design schedules and so to achieve a
successful in-design and ultimately a fast introduction into the market.
OutlookThe Industry segment continues to be impacted by
the different economic and trade tensions aroundthe world. Covid-19 clearly disrupted supply chainsin February and March, but we were proud to nevermiss a delivery to our customers during this difficult
time. Although our order book is in good shape atthe end of March, there will inevitably be some impact on demand and sales in the first half of the coming financial year. The latest IMF World Economic
Outlook (April 2020) predicts global growth to fallfrom +2.9% in 2019 to -3.0% in 2020, although China and India are the only two major countries forecast to maintain positive GDP rates this year. LEM
benefits from a portfolio which is well balanced geographically and across applications.

DC MeterLESR 25-NP

AC
AC
DC
DC
CTSR 0.3-P

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LEM Annual Review 19 | 20

Automotive
segment
performance
The 2019 global car market experienced economic
uncertainty, further decline in combustion vehicles
and a 20% growth in electric vehicles. LEM’s
strategic focus on electric and hybrid powertrains
underpins our growth, with green cars now over
70% of revenues. Our expanding product portfolio
offers a broad range in battery management,
motor control and charging systems. As reliable
partners striving for the highest levels of productquality and project execution, we aim to build
tight relationships with key automotive players.

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Hybrid electric vehicles /Electric vehicles

Automotive segment
performance

Battery management
Highly accurate and ASIL ready sensors provide
all the required information to improve efficiency
and safety of the charging and discharging
process of the battery management system.

HAH3DR
Global car market – economic uncertainty
Global vehicle production in 2019 decreased by
5.7% to 88.7 million units, owing to continued global
economic uncertainty and further contraction of internal combustion engine (ICE) vehicles. All major
markets saw a decline, including China, USA, India
and Germany (source: IHS). Green cars enjoyed astrong growth, particularly in Japan, China, Germany,
South Korea and USA due to government policies,
new models and intensifying consumer appetite foralternative fueled vehicles. Green cars now represent more than 8% of the global volumes produced
annually.

New car production –propulsion share
2
6

8%

6

11

26 %

20

46 %
35

92
74
54

2019

2022

Electric vehicles
Hybrid vehicles
Internal combustion engines
Source: IHS Markit, 2019

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20

2025

Electric vehicles (EV), defined as plug-in hybrids andbattery electric vehicles but excluding traditional hybrids, saw global deliveries reach 2.6 million, 20%
higher than for 2018. 74% of sales were all-electric(BEV). All-electric vehicles have gained another 4%
share in the mix since 2018, driven by growth inSouth Korea, USA and China.
China is by far the largest producer of EVs, with anannual output of 1.2 million units, or 46% of the global EV production. Volumes in China remained flat
year-on-year as the central government reduced theend-consumer subsidies from 2018 levels. South
Korea volumes tripled to 25,000 units; Europe grewby 49% to 601,000 units; followed by North America
with a growth of 28% to 471,000. Japan production
remained broadly unchanged at 122,000 units.
Resilient sales in a challenging environment
Sales in the Automotive segment reached CHF 67.6
million in the financial year 2019/20, a decrease of
5.3%. At constant exchange rates, sales contracted
by 3.9%. The performance across markets has been
contrasted with a strong growth in Korea (+41.7%),
Japan (+30.9%) and in Europe (+29.9%) spurred by
new businesses won in electric and hybrid platforms. Sales in China, LEM’s largest market, contracted by 23.4% owing to the reduction of government subsidies for electric vehicles. Our performancein the US was negatively impacted by the phase outof conventional platforms. EBIT reached CHF 7.9 million, down 2.0 million, while the EBIT margin was
11.7%,compared with 13.9% one year ago. The margin decrease resulted mainly from new R&D resources. We offset part of these effects with volume
growth and efficiency gains in production and administration.
Conventional cars continue to decline
Year-on-year sales in the conventional cars businessfurther contracted by 23.8% to CHF 17.4 million. The
decline was caused by the ongoing technologicalshift away from the conventional 12-volt battery andthe relatively weak US market with a reduction inpassenger cars offset by increased demand for
SUVs and trucks.

GO

Electric Traction Motor
Electronics + Inverter
DC/DC Converter

Motor control
The accelerator gives the signal to themotor control to take power from the batteries.
Reliable sensors are integrated in or to theinverter modules to provide current signals
at very high speed to assure smooth andjerk-free acceleration.

Onboard Charger

Internal Combustion Engine

HMSR

Lead Acid Battery

HBCTHigh Voltage Battery

HAH1DRCAB SF 1500

DC Charger

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LEM Annual Review 19 | 20

Automotive segment
performance

Well positioned to capture growth on green cars
Sales in LEM’s green cars business grew by 3.4% to
CHF 50.2 million. The green car business now represents more than 70% of the Automotive revenues,
reflecting LEM’s strategic focus on electric and hybrid powertrains. We achieved strong growth acrossall important markets. Our business in South Korea
and Japan has been growing fast. In China, we benefit from a leading market position and LEM is well
positioned to capture growth opportunities unleashed by the government’s ambition to achieve
25% electrified cars by 2025. In Europe, carmakers
are under significant pressure to achieve the CO2
emissions targets for new car fleets, and we see
significant investments to launch new electric or
hybrid-electric car platforms. In the US, the green
car industry remains marginal in terms of share of
total newly registered car sales, however several
major carmakers have announced the launch ofelectric models (Mustang Mach-E, F150 electric
pick-up) with the ambition to shape the market inyears to come.
Expanding product portfolio
We continue to refresh our portfolio, offering customers a broad range of products adaptable to theirneeds. In many instances we provide value adding
services to OEMs and Tier-1 suppliers with customer-specific versions of our products.
Battery management
We are offering intelligent battery sensors for start/
stop architectures combining a unique know-how
on current sensing technologies together with ourexpertise acquired on lead acid battery technologies.
For high-voltage battery management (BMS HV), thebattery disconnect unit prevents any unexpected
problem related to high-voltage/high-power powertrain to maintain the user in safe conditions, while
monitoring the battery pack energy to have a precise
estimation of the vehicle range in electrical mode.
Thanks to our unique knowhow on fluxgate technology, with the CAB series we offer sensors with bestin-class accuracy together with ASIL readiness to
avoid a redundant sensor. On Hall technology, there
is a wide offer of single range sensors for high compactness with integrated busbar and cost-effective
solutions. For very high accuracy, we have devel-

LEM Annual Review 19 | 20

22

oped dual range sensors (HSNBV, DHAB) with a dedicated low range to drastically improve offset performances.
Motor control
Our sensors for power inverter applications provide
flexibility to Tier 1 and original equipment manufacturers (OEMs) in their design, with solutions that can be
implemented on various subsystems such as: gate
driver boards, power modules, integrated busbar
and standard busbar mounting.
Charging system
This new product range is offering dedicated technologies to support transfer energy subsystems fromAC to DC and DC to DC with high and low voltages
applications.
For current leakage, we are developing residual current detection (RCD) targeting latest on-board charger generation increasing power density and decreasing costs thanks to high voltage architectures,
vehicle to grid/load (V2G/V2L) and with bidirectional/uninsulated architecture. RCD sensors are able todetect 6mA up to 300 mA DC current leakage toprotect the system and users thanks to functionalsafety ASIL grade compliancy.
LEM organization – a long-term partner
LEM has continuously been investing in the development of its organization with a long-term vision of
putting talent at the service of reliable, high value-added Automotive solutions. We pride ourselves
on being reliable partners to our customers, striving
to achieve the highest levels of product quality andproject execution.
We aim at building tight relationships with key playersof the sector. To do so, we have now completed thereorganization of R&D activities, with regional teams
deployed across our key markets in Europe and Asia.
We are expanding our network of production locations in Europe with the aim to qualify our site in Bulgaria to Automotive standards and have upgraded
our operations in China to the latest cleanliness standards. We are focused on continuous improvement
processes for quality, efficiency and utilization
throughout the total value chain.

Outlook
The crisis induced by the outbreak of Covid-19 will
have a significant negative impact on the growth ofgreen car sales in the short-term. We expect all markets to be impacted globally, with a recovery phase
led by China as the first country to lift confinement
measures.
However, we remain confident about the long-term
outlook for green cars. The megatrends underpinning the shift towards green cars will remain, despite
the shock waves the Covid-19 crisis will send acrossthe automotive industry. Several leading carmakers
announced in 2019 unprecedented investments inelectric and hybrid platforms, showing strong commitment towards the electrification of the industry inthe decades to come. Through the enforcement oftighter regulations for gas emissions and consumer
incentives, governments in China, Europe, Japanand Korea are actively managing the transition fromconventional to green cars. Autonomous driving andMobility as a Service (MaaS) will further drive demand for electric vehicles.

Automotive sales
2019/20

CHF 67.6
millionGreen cars
Conventional cars

50.2 m
17.4 mWe expect a strong demand for high voltage products across our portfolio, spurred by growth in Europe, China, Korea and Japan; while charging systems with integrated current sensor products offer
the strongest long-term growth potential.

“By becoming a thought partner, tier-1 suppliers
can work with OEMs to co-create a vision for the future
E/E [electronic components] architecture and jointly
shape the requirements.”
Automotive software and electronics 2030, McKinsey & Company, July 201923

LEM Annual Review 19 | 20

Auto sectortransformation
Electrification, Connectivity and Mobility as
a Service are transforming the auto sector.
This requires a fundamental change from linear
long-life manufacturing platforms to continuous
product development. Creativity, innovation,
speed and software skills will be key to survival.
There will be clear winners and losers. The very
nature of private car ownership is changing.
Dr. Oliver Spreitzer, automotive strategy expert,
explains.

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25

LEM Annual Review 19 | 20

Auto sectortransformation

Interview with Dr Oliver Spreitzer, Partner,
Strategy Engineers, Munich Germany
Strategy Engineers is an international management
consultancy focused on the automotive industry.
Out of offices in Germany and China, it gives strategic
advice to automotive OEMs and suppliers on how
to turn existing challenges into future opportunities.
The firm provides consulting services to LEM.
1. What are the main drivers for the extra-ordinarytransformation of the automotive sector?
There are two major transformational drivers short to
mid-term – Electrification and Connectivity – and another longer term is Mobility as a Service (MaaS).
Starting with Electrification. The co-operation model
is changing, and the need for scale will see platforms
either being supplier-driven or OEM driven. Battery
supply will be critical, with 20 times growth over 10
years; so major OEMs will vertically integrate andpossibly even invest in lithium mines while smaller
players will struggle for supply. Fast charging is a key
aspect to overcome range issues as well as battery
density – the goal will be to achieve 80% capacity
in a 5- to 10-minute charge of 350kw, similar to fuelcharging today.
The challenge of Connectivity or Autonomous driving is particularly tough. OEMs are historically driven
by mechanical and electrical engineering, with rigid
hierarchies and linear platforms designed for lifetime production over 6-7 years. Now they need totransform into software companies, which are agile,
young, with different processes and continuous development. Some OEMs are building such skills inhouse with new people and new locations. Others
are outsourcing this software capability and purchasing off the shelf from technology suppliers. Another

Electrification will turn everything
upside down and will lead toconsolidation. China will become
more competitive.

LEM Annual Review 19 | 20

26

route is to establish partnerships between OEMs andachieve scale. The role of regulators will be criticalhere, with software standards being set and tested
across major markets.
MaaS is a longer-term driver and will become a hot
issue from 2025 onwards. We forecast that private
car ownership will drop significantly, and the global
installed base of vehicles will decline by 2/3 after
2030. The taxi model of a single ride cannot scale incities under new regulations and the movement tosustainability. Therefore, there will be an increase inride-hailing and drop-off services such as 8-person
fully electric vans, shuttling between fixed points intandem with other forms of public transport. Within
this new urban transport system, the majority of car/van buyers will be fleets owners. So, OEMs will haveto actively engage with these fleet customers andtheir requirements; and some may even choose toact as a mobility service provider themselves or acquire companies with that expertise.
2. How well are the OEMs responding
to these challenges?
Some OEMs are already finding it difficult to fund theshift to electrification (hence consolidation) – while
traditional power train (P/T) suppliers are impacted
as well. Almost all traditional OEMs struggle to transform themselves into a software company – if they
don’t transform (which is not likely) they need topartner and/or find software companies to help
them. In any case taking the changes seriously is key
and some OEMs are fully focused on electrificationand connectivity.
3. How would you paint a picture of the auto
manufacturing sector in 5 years’ time?
The key trends are clear. Electrification will change
everything upside down and will lead to consolidation. China will become more competitive as they arequite good in electrification and own big chunks ofthe value chain. Pressure on sophisticated car software (assistant systems etc.) will rise and will change
electric/electronic (E/E) architectures.

The winners will include Tesla, Chinese OEMs andE/E oriented suppliers; battery suppliers will grow big
time. The Chinese OEMs and suppliers benefit fromtheir focus on speed and time to market, the pace ofinnovation, their willingness to change platforms,
experiment and be flexible. And now they also haveinternational experience.
The losers will be most traditional OEMs who willneed to partner/consolidate; and internal combustion engine (ICE) -oriented suppliers will definitely
suffer.
4. How is the role of the private individual car
going to change given trends in e mobility, public
transport, urbanization, sustainability? Are
there going to be important differences acrossgeographies and cultures?
We have seen less interest in car ownership (or evendriver licenses) in younger customer groups formany years already, especially in Europe, and this willof course continue. So far new mobility services
have not led to a measurable reduction of the private
car fleet. But as I remarked earlier, we do expect thisto change quite notably from 2025 onwards.
Sustainability might play a role especially in Europe
but we do not expect significant changes in the next
5 years unless governments change policies (e.g.
city traffic exclusion etc.).

Connectivity is transforming
manufacturers from rigid
mechanical platforms into
continuous development softwareinnovators.
Government subsidies play a big role as evidenced
by the dramatic changes in China with a decrease in
growth of electrified car sales after the stop of subsidies.
Charging infrastructure is clearly a hurdle today but
we believe it will be solved and people will need toget first-hand experiences to gain trust. There will beseveral actors providing charging infrastructure: OEM
own networks; OEM consortium networks; retail outlets such as supermarkets; corporates offering toemployees; and of course, existing petrol/diesel retail networks.
Sustainability is a factor as well; we believe that by2025 there will be a tipping point (from “push” to“pull”) for pure battery electric vehicles (BEVs) as (a)the total cost of ownership (TCO) becomes comparable to ICE cars and (b) it will be totally “uncool” tobuy/possess a conventional ICE car.

Urban areas are most suited for mobility services,rural areas will come later. Developed countries will
have a higher affinity for non-car ownership thanemerging countries.
5. What insights do you have about the different
framework factors which will influence the rate of
EV take up in different countries or even cities?
CO2 regulations are the key driver, since customer
interest and demand for EV technology per se is stillrather limited.
As far as it can be seen today, driving bans will notnecessarily require increased EV usage, rather useof the latest ICE technology; as this is cheaper, theimpact will be limited.

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LEM Annual Review 19 | 20

Auto sectortransformation

We expect big changes to E/E architecture due tothe need for substantially higher computing powerfor onboard applications. There is a trend towards
higher voltage for onboard networks, up to 400 V
and even 800 V.

Transformation of global profit sharein passenger car market

6%

5%

13 %
3%

37 %

2%

19 %
55 %

14 %

21 %
25 %

2017
$ 300 billion

2030$ 475 billion

6. What is your view on the importance andinfluence of certain factors on the choice ofpower train technologies?
Well in theory the energy mix of electricity production in different countries should be a factor. But solong as regulation is on the use of energy from fueltank to wheel, the influence will be limited as normal
buyers don’t care. Current regulations exclude a full“cradle to grave” environmental impact analysis of
the different power trains.
A big topic is the cost to the buyer – initial and total
ownership. Subsidies and dealer incentives will beneeded to reach sufficient sales figures for EVs; thisshould change from 2025.
Lastly, the driving experience is important. This includes range, charge time, charging infrastructure. It
is clearly a learning ground for car buyers to change
behavior and gain trust and will be a question of time.

LEM Annual Review 19 | 20

28

Vehicle Sales
Shared Mobility
Supplier Software
Aftermarket
Digital Services
Supplier Hardware

Source: Strategy Engineers/Accenture

7. Which are in your view the key technicalevolutions that influence the design of theonboard systems in Automotive?
The e-motor is not a big influence. Hub motors couldchange a lot but are hardly applied in mass market
cars; there is a strong trend towards fully integrated,
modular e-axles.
Batteries will become bigger and need more space;solid state might reduce space and weight, which
would also require different cooling techniques. Withsolid state there is an opportunity for Western companies to build a new innovative approach to counter the Chinese dominance of the liquid battery market.

8. What are the key lessons already to be takenfrom the Covid-19 outbreak for the sector?
Clearly there needs to be a rethinking of the global
supply chain and to reduce dependability on China.
The pandemic is having a dramatic financial impact,with some estimates of a loss of over $100 billion inrevenues. This will sharpen even more the decision-making process for OEMs about where they
invest going forward across their different technologies and platforms. And it will accelerate the consolidation process in the sector, with perhaps a role forgovernments in deciding who survives. It will be interesting to see the impact of the pandemic on consumer appetite for travel and attitudes to car ownership.
9. What are the key organizational characteristics
and skillsets needed for the auto manufacturingsector to navigate this transformation challenge?
The old style mechanically driven OEMs will need tochange their rhythm from platform and program-oriented engineering to one of continuous product development. Employees with new skillsets will beneeded in software related functions. There will beless hierarchy, with more agility and empowerment
to take and execute fast decisions. Creativity andinnovation will become valued, with greater appetite
for risk and there will be more openness to making
mistakes. The old mantra of slow but sure focus on
100% quality and efficiency will be sacrificed foradaptability and speed to market.

Share of addressable profits inpassenger car market
95 %

55 %
45 %

New Entrants
Established OEMs &Suppliers

5%

2017

2030

Source: Strategy Engineers/Accenture

The old mantra of slow but surefocus on 100% quality andefficiency will be sacrificed foradaptability and speed to market.

DC links will be important due to the increase incharging power (e.g. 350 kw) that requires charging
cooling and new onboard chargers. New charging
strategies will be needed to assure satisfactory battery life.

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LEM Annual Review 19 | 20

Trends,
technology,
R&D
The current sensor market is expected to growby about CHF 1.5 billion in the next 6 years,
driven by Mega trends such as renewable energy,
mobility, and digitization. LEM is adopting
new technologies across its broad portfolio of
applications. Significant investment in ourhighly skilled R&D teams continues to bear fruit.
We launched ten products in 2019/20.

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LEM Annual Review 19 | 20

Trends,
technology,
R&D

Mega trends drive long-term growth
Our growth is driven by mega trends such as renewable energy, energy efficiency, reliable energy, distributed energy, mobility, automation and digitization.
They drive demand for sensors, give multiple opportunities to leverage LEM expertise and ensure a sustainable long-term business for all our stakeholders.
Based on IHS data and our analysis, the current sensor market is expected to grow from about CHF 2.4
billion in 2019 to CHF 3.9 billion in 2025. Our strong
heritage is Industry applications where we are market leader and have significant growth potential,
while our fastest growing sector in the long-term is
Automotive applications. Far from being a mature
market, current sensing products are undergoingsignificant mutations, driven by new applications andtechnologies. These fast-changing markets will leadto pricing pressure, shorter product lifetimes, quicker return on investments and will require companies
to be more agile.

The chapter on the auto sector transformation describes the scale of what is happening to both OEMsand suppliers; consequently, LEM has opportunities
thanks to the switch to electric powertrains, the miniaturization of components and the adoption of integrated current sensors. Across both Industry andAutomotive applications, we see demand for additional functionalities towards current transmission
and digital information.
Technology trends
Ever higher power densities drive new
current sensing technologies
The power density is the amount of power generated
per unit volume of the motor. The more powerful the
motor in a smaller envelope, the higher the power
density. Increasing power density is therefore a critical factor to increase performance, as space constraints are present in virtually all industry and automotive applications.
Two technologies are enabling a step-change in levels of power density: Silicon Carbide (SiC) and Gallium Nitride (GaN). These allow higher switching frequencies and thus are very well-suited for industrial
applications where performance is key.

“It now looks like emissions could
easily drop by 5% or more this year
alone as a result of the Covid-19
pandemic…and in the longer term,
the stickiness of some of the
new behavior, business models andtechnologies will certainly
accelerate the transition to a
low-carbon economy.”
Source: Bloomberg NEF, Michael Liebreich“Covid-19 – The Low-Carbon Crisis” March 26, 2020

LEM Annual Review 19 | 20

32

The increased demand for small sensors, capable ofhandling high levels of power density, led to theemergence of integrated current sensors over thelast decade. Integrated current sensors measure theprimary current line directly through surface-mounted integrated circuit (IC) and became a technology
of choice for industrial and automotive applications
thanks to their ability to sense high currents while
using a very compact footprint.

Digital is disrupting energy andmobility usages
Smart grid and autonomous driving are two major
disruptions led by digital revolutions to bring smarter,
greener and more efficient ecosystems. This is creating a lot of data, communication and the need for
artificial Intelligence. At LEM we are developing
smarter sensors with data processing, safety with
self-diagnostics, and added value with embedded
software to achieve real time computation, which
accelerates information transmission and decision
making in the system.
The electrification of vehicles opens new
applications to current sensors
By 2028, 50% of annual car production will be using
hybrid and electric powertrains. In addition, electricand hybrid vehicles require a higher number of current sensors than combustion powertrains, spurring
an exponential growth for the demand of sensors:from about 100m of current phases measured in2018, LEM estimates that the market will grow morethan 4x, to reach about 450m in 2028.
LEM believes on-board chargers (OBC), DC metersand DC/DC converters will play a key role in energy
distribution and management of hybrid and electric
powertrains. OBCs provide the means to recharge
the battery using an AC socket at home or from acharging station. DC/DC converter translates highvoltage coming from the battery to a lower voltage
which is then used for various on-board applications(A/C, electric power steering, etc.).
DC metering is becoming mandatory in the EU andthe US markets, as regulators want customers to pay
only for the power load of the battery of the vehicle,
net of power line losses. Detecting current leakage
is an important side application for DC metering,
bringing a protection for customers in case of a malfunction of the charging station. Ever higher power
levels (up to 800V) place the battery system as theheart of the hybrid and electric powertrains. Accurate battery management systems that can measure
the state of charge (SoC) and state of health (SoH),
have become increasingly important to ensure thedriver has access to reliable information on the remaining driving range, and that the battery cells arewell maintained to protect the battery life.

More stringent safety standards pave the way
for autonomous driving
Automated driving functions are realized with interconnected systems using Automated Driving Assistance Systems (ADAS). Those systems are replacing
part of a driver’s usual decisions keeping him andothers safe from hazards. To maintain this level ofsafety, ADAS are implementing functional safety defined by the ISO 26262 standard. We are introducing
this standard to offer the strongest safety functions
to our customers using LEM sensors in electrical vehicles powertrain systems such as battery, motor or
power converters.
Smart grid, a new market for current
sensing solutions
Our energy system is undergoing a radical transformation, as millions of electric vehicles hit the roadand terawatts of renewable energy capacity are installed. These changes are essential to decarbonize
our energy system but are creating significant challenges. First, wind and solar energy’s intermittent
nature force grid operators to provide flexibility to thesystem. Second, the rapid growth of Distributed Energy Resources (DER) is decentralizing the distribution network, increasing the complexity of its operation. A smarter grid is thus needed to reliably
integrate intermittent renewable energies and DERs.
LEM provides sensors that measure electrical parameters along the network, allowing grid operators
to monitor, control and automate the grid operation.
LEM offers best-in-class solutions for the ever-increasing demands of utilities and equipment manufacturers.

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LEM Annual Review 19 | 20

Trends,
technology,
R&D

Sustained R&D investments
In 2019/20 we continued to invest substantial resources in R&D to assure long-term growth. Fourmain trends prevail in driving our investments: thestrong demand for electromobility in Asia; measurement of energy flows in smart grids; requests from
Automotive customers for functional safety throughthird-party certification; and demand for tailoredsolutions in high volume applications.
Our investments are split into near-, mid-, and longterm projects, such as developing building blocks
for the next decade. This is leading us from a traditional, electromagnetic sensors company into a
broadened business of various integration levels.
Examples are the integrated semiconductor based
HMSR, which will be released in 2020, and the DC
meter for charging stations which has an intelligent
ethernet interface and a high integration level into
the customer product.
Our R&D team provides a diversified skillset to deliver the best product. It is to our advantage that we
produce for customers in the industry and automotive segments, which allows us to leverage synergies
to produce larger systems, modules and semiconductors. This gives us the versatility to master thevalue chain from the design function at an IC level all
the way up to the full sensor and customer application. Our broad skillset led us to produce functionally safe sensors to protect customer products andusers from higher current ranges. As a result, dedicated products in the automotive segment havebeen certified by an external third-party and are thus
functional safety compliant.
Development across sites, teams and segments
We slightly increased our R&D investment from CHF
27.6 million in 2018/19 to CHF 28.0 million in 2019/20
and continued to contract R&D resources to support
projects.
In Lyon we develop products for smart grid, traction,
DC metering for EV fast charging stations, and automotive battery management systems. We hired a
new project manager for traction products and rented additional space to extend our testing laboratory,
prototyping facilities and create additional meetingrooms.

LEM Annual Review 19 | 20

34

In Geneva we focus on products going into drives,
residual current detection, high precision and semiconductors. To strengthen the semiconductors
team, we hired two engineers with experience insemiconductors and transferred two engineers fromother functions within LEM.
R&D teams in both Geneva and Lyon focus on new
and advanced technologies, such as embedded
software and validation, predevelopment of technologies and innovative applications of our products.
Therefore, we continue to have a dedicated innovation team on both sites, which is working with universities and technical institutions.
In Japan, we completed the new R&D team for Automotive applications, which successfully launchedthe HBCT battery sensor. We further strengthened
engineering capabilities in Beijing and Sofia to execute major locally customized projects, such as
open loop sensors in Beijing and Rogowski coils in
Sofia.
Technical focus and product launches
We are running product projects in the areas of automotive battery management, integrated current
sensors for renewable energy applications, drives
and traction.
We continued to make significant investments insemiconductor(-based) products, such as ASICs
and HMSR which is an integrated current sensor. We
also increased our knowledge on semiconductor
packaging, supply chain and testing.
We launched two traction voltage sensor products.
In the area of smart grid, we work on products going
beyond pure sensors and launched our first digital
integrator product, which works with our Rogowski
coils, and we are in the process of completing a second one with a high current output. We continue
working closely with customers to develop tailoredsolutions for DC metering for Electric Vehicle Fast
Charging stations which are currently being approved by the German authorities for their market.

We enhanced our battery management system family with a broader CAB product portfolio, including afunctional safety certified version. We are working toaddress more compact solutions and cheaper cost
per surface to fit power trains. We are also in theprocess of developing a full range of products of fast
charging systems, in particular with residual current
detection solutions.
Our efforts were recognized by the granting of 13
patents, 1 utility model, and 13 designs.
Our significant investments in R&D over recent years
continue to bear fruit. In 2019/20 we launched ten
products.
OutlookIn 2020/21, the investment in our R&D capabilities
will remain significant. In Automotive we will focus oncompact packaging of products, improved performance, and reduced volume. In Japan, we continue
working on an important customer project and in
China on strengthening our capabilities. In Industry
we will focus on DC meters and the HMSR and willsee further growth in the development of ASICs andsemiconductor- based integrated current sensor
products.

Product launches 2019/20
Product

Segment

Application

LZSR

Industry

Renewables

DVC1000P

Industry

Traction

DVC1000X

Industry

Traction

AI-PMUL

Industry

Smart Grid

HOF-Analogue

Industry

Drives

HLSR with FeSi Core

Industry

Renewables

IN 2000-SB

Industry

High Precision

IN 500-S

Industry

High Precision

HBCT

Automotive

Battery management

CAB SF 500

Automotive

Battery management

LZSR
Hall effect ASIC closed loop
sensors, high peak measurements
and very low offset drifts. For
solar inverters. Also for robotics,
servo motor and variable speed
drives, uninterruptible andswitch-mode power supplies,
battery-supply installations,welding power supplies.

AI-PMUL
Versatile integrator for Rogowski
coils. Wide range of standard
analogue true RMS and instantaneous outputs. Measures
AC currents into the smart grid,
allowing control rooms toautomate, monitor remotely andshare real-time equipment data.

DVC 1000-P
Insulated nominal measurementof 1000 V DC, AC or pulsed.
Compact, light, robust. For
traction and industrial applications. Measures voltages in
DC link, inverter output voltage,
input voltage of 4 quadrant
converters, or battery voltage
in rolling stock equipment.

HBCTHall effect open loop automotive
current sensor. Measures actual
value flowing in and out of thebattery and ambient temperature.
Full galvanic separation of highpower and electronic circuits.
Excellent accuracy, very low
thermal offset and sensitivity
drift.

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LEM Annual Review 19 | 20

Culture,
talent& values
We offer people the opportunity to develop
personally and to make an impact on society.
Our global footprint and human size encourages
mobility and diversity. We continually look fortalent with core competencies in new markets
and technologies. Leadership, entrepreneurshipand an improvement mindset are key qualities
we seek. In 2019 we launched a global program tobuild a Constructive Culture to underpin how
we all think, behave and communicate. Regarding
Covid-19, we are proud of how all our teams
have adapted to the different regulations while
continuing to serve our customers.

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LEM Annual Review 19 | 20

Culture journey

Our industry is changing fast and being shaped byseveral technology breakthroughs. So is LEM: weare making the organization more agile to ensure we
capture and manage global growth to 2025. LEM is
made of the expertise, talent and leadership of the
1,500 people working relentlessly to bring customers the best solutions. Our organization is evolving
towards a decentralized model where the headquarters are responsible for strategy, setting standards,
innovation and coordination. Decision making will
become increasingly decentralized as capabilities
are being deployed at each site in R&D, operations,sales and quality. With these changes, LEM is increasing speed and agility while reducing time-tomarket.

“A conscious business fosters
peace and happiness in individuals, respect and solidarity
in the community, and mission
accomplishment in theorganization.”Fred Kofman, Conscious Business

The need
We have consistently invested resources in talentdevelopment programs and coaching sessions to
help talents grow and shape the future LEM. But thechallenge today is how to equip our teams with theappropriate mind-sets and skill-sets to work in thisreshaped organization, to collaborate effectively, tochange old habits, to become more agile. In short, todevelop a High-Performance Culture.
The way forward
Working together with a specialist consulting firm(sum people), we have devised a global program –our Culture Journey – that we believe will help all our
people significantly improve their individual performance, and thus that of the whole organization.
Research shows many organizations exhibit three
types of culture:
Aggressive/Defensive (Red Style)
These encourage members to appear competent,
controlled and superior - even if they lack the necessary knowledge, skills, abilities or experience. The
constant pressure to maintain the façade of perfection and expertise comes at the expense of members’ health, motivation, teamwork and the way inwhich customers are treated.
Passive/Defensive (Green Style)
These members are expected to do whatever it takes
to please others (particularly superiors) and avoid
interpersonal conflicts. As a result, those organizations experience quite a bit of unresolved conflict
and turnover and their members report relatively low
levels of motivation and satisfaction.

The process
The methodology developed and validated by
Dr. Ekki Kuppel is the IT-WE-I triangle used to build a
High-Performance Culture.

High performance culture model

The guiding principle is to work simultaneously on all
three elements of high performance “Enhancing the
I and the WE in the service of the IT”.
Two surveys are completed by participants at thelevel of the individual (I), and the team and organization (WE). These measure the three behavioral
styles: Aggressive/Defensive, Passive/Defensive
and Constructive.
Implementation
Like all effective change programs, this Culture Journey started at the top of LEM: the Executive Committee completed the surveys and participated in two
workshops to share, understand and plan changes
to their styles.
It was decided to implement and cascade the program in three phases:
1.

The first-level management teams inthree regions: Switzerland/France,
China, Bulgaria
2. Culture Ambassadors across all regions
3. These in-house staff then train
second-level management teams in
all regions

Sustainable
Performance

WE
WE
Collaboration
Trust & Respect
Mutual accountability
Shared values
No “elephants”

Player mindset
Learner mindset
Self awarenessSelf discipline
Coach

Shared purpose
Clear goals
Effective Organization
Productive Meetings

Source: sum people all rights reserved, 2020

The sequence for each group follows that for the Executive Committee: the surveys plus two High-Performance Team (HPT) workshops, with a phased
timing across 2019-2020.

Constructive (Blue Style)
These encourage members to work to their full potential resulting in high levels of motivation, satisfaction, teamwork, service quality and sales growth.
The goal is for LEM to build and maintain a consistent
Constructive Culture to underpin how we all think,behave and communicate personally and collectively. The Blue Style consists of 4 categories of desired
behavior: Achievement, Self-Actualizing, Humanistic-Encouraging and Affiliative.

LEM Annual Review 19 | 20

38

39

LEM Annual Review 19 | 20

Culture journey

Executive CommitteeFrank Rehfeld
Chief Executive Officer

The role of the Culture Ambassadors is particularly
important. They are drawn from a wide-cross sectionof functions and experience levels. The essence of
the Ambassador program is to empower key influencers from across the organization to work with the
Executive Committee to spearhead the culture transformation of LEM. Within this they have 5 key roles
1.

2.

3.

4.
5.

Become role models with Constructive 		Blue behaviors, acting as Players and 		Learners
Coach and mentor other members of
the organization to spread constructive
behaviors
Act as an informal communication bridge 		
between leadership and the rest of LEM 		to bring greater clarity
Be storytellers for the new LEM culture
Build with Executive Committee andimplement the culture plan for the restof LEM

Insights to date
Different parts of the LEM group are at different stages along the program. Each High-Performance Team
(HPT) is expected to take ownership of the findings
and to devise specific actions to adopt more of aBlue Style in their everyday work and communication.

the excitement and energy of the Ambassadors, andrecognize the importance of their own leadership asrole models. This argues well for the dynamism of the
Culture Journey going forward.
Participants have learned some useful techniques tocommunicate better, to deal with criticism, to build
trust, to solve problems constructively. A small example is the technique of “checking in” at the beginning of a meeting on participants’ overall mood andother concerns which may be blocking performanceon the issue under discussion.
The program is also enabling teams to avoid blaming
others for failures on a project, but rather to takeownership and learn from mistakes collectively. Thisis important as the organization seeks to adopt bestpractices and ensure cross-functional approaches,rather than sticking to traditional “silos” of expertise.
In summary, it is already clear that a Constructive Culture will help current employees achieve their fullpotential and enjoy their experiences, as well as attract the right caliber of new talent to ensure LEM
achieves its strategic goals.

Andrea Borla
Chief Financial Officer

Rebecca Cullinan
Senior Vice President, Industry

Individuals have found the experience to be helpful
for better understanding of their own styles, and thatof their colleagues on the HPT. Unsurprisingly, there
is more Red Style and Green Style than that of Blue
Style across most teams. This validates why the LEM
Executive Committee commissioned this Culture
Journey in the first place; they had recognized room
for improvement.
An important feedback from Culture Ambassadors istheir positive surprise at the commitment of the senior management to such a broad and deep program.
Moreover, the Executive Committee have witnessed

Rainer Bos
Senior Vice President, Automotive

LEM Annual Review 19 | 20

40

41

LEM Annual Review 19 | 20

Talent and values

We are developing and recruiting the best global talent with new competencies to deliver the growthpotential of the company. LEM offers people a significant purpose and opportunity to make an impact onsociety, working at the forefront of mega trends suchas renewable energy, mobility and sustainability. We
are a high quality global employer, human-sized witha collaborative culture. As market leader in several
applications of electrical measurement, our employees enjoy intellectual challenges, diverse pathways
and global career opportunities.
New talent
We are continually looking for new talent who wish to
make a difference and have a concrete impact onsociety. We offer a multicultural, human-focusedworking environment allowing self-fulfillment in a
growing and challenging context. We are focused on
hiring core competencies in new markets such as
smart grid, semiconductors and embedded software
as well as in the fastest growing area of e-mobility. In
addition to technical competences, new recruits
should demonstrate qualities such as leadership, entrepreneurship, empowerment, accountability, continuous improvement mindset, innovation and ambition.

Employee analysis
31. 3.2020

31.3.2019

1’376

1’385

FTE
Permanent employees

109

48

Trainees

Temporary employees

11.84

44

Total

1’497

1’477

Women in overall workforce

54%

54%

Women in non-production related activities

31%

34%

Women in management positions

30%

24%

LEM Annual Review 19 | 20

42

Development of competencies
A committed workforce is essential for LEM’s lasting
success. To this end, we support our employees toattend regular job-specific training and develop theirpersonal skills. We continue to invest 1.5% of totalgroup salary costs for internal courses and participation in external training. As part of our internal talentinventory, this year we launched the Leadership andTalent Acceleration Program which incentivizes anddefines development wishes of our employees andincreases internal succession bench strength. We
are focused on developing internal talents throughjob rotation, global projects, international mobility
and promotion. Technical competencies for new
products and applications and leadership development were the primary focus. Some employees had
the chance to broaden their cultural experience andwork temporarily at the Geneva, Beijing, or Sofia site.
Leadership development programs at LEM focusedon change management and delegating responsibilities. These efforts were complemented by a specificincrease of technical competencies such as key account and project management.
We believe our Culture Journey program (see pages
38–40) will help all our people significantly improvetheir individual performance, and thus that of thewhole organization. Our goal is to continually develop a constructive High-Performance Culture to underpin how we all think, behave and communicate
personally and collectively. The program waslaunched during 2019, starting with the Executive
Committee; it is being adopted by all senior management teams, and cascaded across the company withthe engagement of internal Culture Ambassadors.
Equal opportunities
LEM provides equal opportunity to all qualified individuals. The share of female employees is 54% in
the overall workforce. However, given the historically high share of engineering positions in productdevelopment, sales & marketing and management,
the share of female employees in the non-production related activities is 31%. We actively seek female candidates in order to increase their share in
the higher qualification positions, and there has
been significant progress in markets such as China
where many engineering graduates are women. In
December 2019, we welcomed our first female mem-

Workforce by activity

Average length of service

1’497 total employees

1’376 permanent employees

8

7.02

14 %

7.02

7.00

7.08

6

13 %
4

10 %

2

63 %

0
Years

Operations
Admin & Logistics

R&D
Sales & Marketing

ber of the Executive Committee with Rebecca Cullinan as new Senior Vice President Industry. Last year,
the Geneva site conducted an in-house equal pay
survey following a new disclosure requirement by
the Swiss government. The analysis, which was verified by an independent body, showed that men andwomen earn the same salary for equivalent positions.
Health and Safety
We continue to enhance health and safety at theworkplace. The most important measures include
systematic health and safety training for newcomers,
seminars and online classes to support work-life balance, annual evacuation trainings and signage in allareas. All sites have a clear evacuation plan in place.
We perform regular internal and external audits toanalyze the effectiveness of the measures and thedevelopment of improvements.
In regard to Covid-19, we strictly followed the hygiene
measures and social distancing rules communicatedby the local authorities. In Beijing, we extended the
shutdown of our site for an extra week after the Chinese New Year’s holiday. In Geneva, Lyon, and Sofia

Operations
Admin & Logistics

R&D
Sales & Marketing

we introduced various measures, starting mid-March.
We encouraged employees to work from home or to
split their time at the office with their colleagues, toconduct meetings via Skype or telephone, provided
hand sanitizers and protective masks, deployed additional cleaning of door handles and handrails, asked
people at risk to stay at home, and issued employer
certificates for cross-border commuters. In Geneva,
we mobilized a crisis management team, which meetsonce a day to monitor the situation at the Geneva site
and to follow the guidelines provided by the local andnational health authorities as well as the WHO.
Internal communication
We continued to improve internal communications,particularly when it comes to important, strategic information, such as the announcement of the new
SVP Industry, the retrenchment of certain jobs in Geneva, the new Group Operations organization,
Covid-19, and the quarterly results. We also held regular town hall meetings at all sites during executive
management visits as well as a monthly leadership
lunch with the CEO.

43

LEM Annual Review 19 | 20

Talent and values

LEM Annual Review 19 | 20

44

45

LEM Annual Review 19 | 20

Board of Directors

François Gabella
Member of the Board of Directors

LEM Annual Review 19 | 20

46

Ilan Cohen
Member of the Board of Directors,
Member of the Strategy Committee

Werner C. Weber
Member of the Board of Directors,
Member of the Strategy Committee

Andreas Hürlimann
Chairman of the Board of Directors,
Chairman of the Strategy Committee,
Member of the Nomination andCompensation Committee

Ueli Wampfler
Member of the Board of Directors,
Chairman of the Audit and Risk
Committee

Ulrich J. Looser
Member of the Board of Directors,
Chairman of the Nomination andCompensation Committee,
Member of the Audit and Risk Committee

47

LEM Annual Review 19 | 20

Our core values

The LEM team is made of the expertise, talent and leadershipworking relentlessly to bring customers the best solutions.
Our core values are the beliefs we share – and the spirit andintent of everything we do.

We are customer driven
All our activities are driven by the desire to provide
best quality service.
We operate with integrity
Our relationships with co-workers, customers, suppliers,
partners and the investor community are based on openness
and fairness.
We value teamwork
Teamwork is more than just working together, it is bringing
out the best of everyone’s strengths.
We commit
We set our goals high and take responsibility for all our actions.

LEM Annual Review 19 | 20

Responsibility

We believe that sustainable and ethical practices
create long-term value for all key stakeholders in society and assure the longevity of businesses. Our
success stems from operating within a clear value
system, following best practice principles and standards, together with the close monitoring of environmental, social and governance (ESG) key performance indicators (KPI).
LEM Code of Conduct
The LEM Code of Conduct (CoC) is our key document. It reflects the United Nations Global Compact,global environmental standards and our core values.
It is a binding document for employees and business
partners, such as suppliers and consultants, whose
compliance we regularly audit. Every LEM employee
receives e-learning training on the CoC, including instructions and case studies, and signs it.
United Nations Global Compact
Since 2006 we adhere to the Ten Principles of theUnited Nations Global Compact, which are driving
global action to achieve the Sustainable Development Goals by 2030. These principles, which relate
to human rights, labor, environment and anticorruption, are embedded in every aspect of LEM, from ourstrategy to our actions. As we do every year, in 2020
we provided an update on our progress to the United
Nations which is available on our website. In addition, we follow the best practice policies of the Universal Declaration of Human Rights and the UK Bribery Act.

LEM Code of Conduct

We strive for excellence
No matter how good our products, services, process andresults, we are dedicated to making them better.

EthicsWe lead innovation
By thinking out of the box, we adapt totomorrow’s requirements.

Environmental standards– Preserving the environment– Protecting human health– Utilizing natural resources rationally48

Human rights

Business practices

Sustainable and ethical practices
create long-term benefits forsociety and business longevity.
We operate within a clear
value system governed by our
Code of Conduct.
Environmental standards
The trends to sustainable energy sources and electromobility are two of LEM’s key growth drivers. Our
accurate sensing solutions give our customers acompetitive edge in energy management solutions.
For example, LEM sensors’ high accuracy directly
impacts the battery pack size of an electric or hybrid-electric car, and hence improves car weight andenergy consumption.
All our production sites are ISO 14001:2015 certified,an environmental certification which we renew regularly.Our production activities are compliant with
REACH (European Regulation for Registration, Evaluation, Authorization and Restriction of Chemicals),
RoHS (Restriction of Hazardous Substances) as wellas conflict minerals reporting and obligations. LEM
regularly publishes updates to its standards and reporting on our website. All LEM manufacturing sites
apply waste sorting and treatment solutions. For
each new product, we develop an environmental
profile before launch, which includes recyclability
rate and material saving compared to previous orequivalent models.

United Nations Global Compact– UN Sustainable Development Goals

49

LEM Annual Review 19 | 20

Our sensors for energy efficient
applications contribute to a moresustainable world. We continuallydevelop our ESG initiatives
and report transparently on
our progress.
ESG performanceWith our sensors for energy efficient applications, we
contribute to a more sustainable and responsible
world. Equally, we recognize the importance to makea meaningful contribution within our organization andto keep score of our environmental, social, and governance (ESG) performance. This is why we started
collecting key performance indicator (KPI) data since2015. Our ambition is to continually develop our internal capabilities and sustainability initiatives, and toreport transparently on our progress.
Environmental
We measure our environmental footprint through theconsumption of power, water, and petrol, the CO2
emissions from air freight, continuous compliancewith ISO 14001, and the number of supplier audits
conducted.
Power, water, and petrol consumption are measured
by the total numbers of sensors sold, as all of them
are directly output related. Petrol is used for ourcompany cars globally, mainly by our sales teams,
and also to back generators during power shortages
in China. We disclose CO2 emissions from air freight,
as this is the main mode of transportation to get our
products to our customers.

LEM Annual Review 19 | 20

50

Our 4 production sites comply with the ISO 14001
standard. Every year, we audit suppliers based on
their ESG performance and make sure that our ESG
principles are well cascaded across our supply chain;
this is our standard procedure before we accept a
new supplier.
Since 2015, the KPIs for supplier audits, freight emissions, and petrol and water consumption haveshown a positive development and we maintain the
ISO 14001 certification due to consistent processes.
Social
It is our goal to foster a culture that encourages professional development, equal and fair treatment, andthat nourishes and empowers every individual. We
want to be a company where every employee canfeel safe to be creative, innovative, and thrive with
their personal talents.
We make sure that our employees are not subject todiscrimination based on characteristics other thaninherent factors required for the job. This financial
year, our Geneva site was audited for its gender pay
gap confirming that women and men earn the samesalary for equivalent positions (see chapter Culture,
talent and values). To help our talent prosper, we encourage them to seek professional development. We
executed 908 training days in 2019, which is morethan double that of 2015.

ESG Key Performance Indicators
2015

2016

2017

2018

2019

2019 vs 2015

Environmental
Power consumption (kWh)/total numbers of sensors sold

0.152

0.149

0.141

0.144

0.156

+3%

Water usage (L)/total numbers of sensors sold

0.65

0.72

0.63

0.49

0.51

–22%

Petrol usage (g)/total numbers of sensors sold

1.25

1.21

0.89

0.85

0.90

–28%

Freight emissions in tons of CO2

N/A

N/A

N/A

7’618

7’577

(vs 2018) –1%

Production sites with ISO 14001

100%

100%

100%

100%

100%

38

36

55

46

44

Number of supplier audits+16%

SocialDiscrepancy between salaries of men and women*

N/A

N/A

N/A

N/A

99.7%

Number of training days by external companies

287

410

571

366

908

Code of Conduct signed by our employees

93%

89%

93%

96%

97%

+5%

% of employees trained on the Code of Conduct

N/A

N/A

N/A

63%

84%

(vs 2018) +33%

+217%

GovernanceAll years are 12 month calendar periods*100% = no discrepancy, Geneva site only

In light of Covid-19, our site in Beijing donated
165,000 RMB to finance epidemic prevention material for a hospital in Wuhan. Half of the donation camefrom our employees and half from the company.
Governance
We want our employees to act based on our CoC tomake sure that our values are well understood acrossall sites, cultures, and positions. This is why we ensure all employees sign the CoC upon their arrivaland require them to take an e-learning. The test was
launched in mid-2017, is based on 12 questions andhas to be retaken every three years. For the year
2019, 84% of our employees with more than six
months at LEM have taken this test.

51

LEM Annual Review 19 | 20

Information for investors

ContactAndrea Borla (CFO)
Phone: +41 22 706 12 50
E-mail:investor@lem.com

Number of registered shareholders
31.3.2020

31.3.2019

1– 499

1’048

1’153

500 – 4’999

50

50

5’000 – 49’999

57

50’000 and more

4

4

1’107

1’214

Total

Share price development LEM HOLDING SA (LEHN)
compared to SMI
in CHF

LEHN
SMI

2000

1600

Shareholders by category
31.3.2020

31.3.2019

Institutional shareholders

48.7

48.1

Private individuals

25.6

26.7

LEM employees, managers and board

6.6

6.5

Treasury shares

0.0

0.1

Nonregistered shares

19.1

18.6

Total

100.0

100.0

In %

Symbol

LEHN

Listing

SIX Swiss Exchange

Nominal value

CHF 0.50

ISIN

CH0022427626

Swiss Security Number (Valor)

2 242 762

In number of shares, CHF

Number of sharesYear high 1

2019/20

2018/19

1’140’000

1’140’000

1’520

1’772

1

850

920

Year-end 1

1’062

1’280

Average daily trading ­volume (shares)1

1’041

878

Earnings per share

53.27

45.97

40

42

1’211

1’459

Ordinary dividend per share2

1

400

0

2.5.142.11.142.5.152.11.15

2.5.162.11.16

2.5.172.11.172.5.182.11.18

2.5.192.11.1930.4.20

Financial calendar
1 April 2020 to 31 March 2021

LEM share

Market capitalization as per 31 March

800

Source: www.six-group.com

Share information

Year low1200

1 (in CHF millions)

9 June 2020
16 June 2020
18 June 2020
29 July 2020
3 November 2020
4 February 2021
19 May 2021
24 June 2021
1 July 2021
6 July 2021

Annual General Meeting for the financial year 2019/20
Dividend ex-date
Dividend payment date
First-quarter results 2020/21
Half-year results 2020/21
Third-quarter results 2020/21
Year-end results 2020/21
Annual General Meeting for the financial year 2020/21
Dividend ex-date
Dividend payment date

Source: SIX

2 Proposal of the Board of Directors to the Annual General Meeting of Shareholders for 2019/20

LEM Annual Review 19 | 20

52

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LEM Annual Review 19 | 20

L eading the world in electricalmeasurement, LEM engineers
the best solutions for energy andmobility, ensuring that ourcustomers’ systems are optimized,
reliable and safe.

Copyright© 2020 LEM HOLDING SA,
Fribourg

Concept and text
LEM, Fribourg
Cabinet Privé deConseils SA, Genève
SNK Identities AG, Zurich

DesignSNK Identities AG, Zurich

PhotosMara Truog, Zurich
Getty Images

Printing
Druckprodukt, Zurich

Annual Review
19 | 20

LEM HOLDING SA
Avenue Beauregard 1
1700 Freiburg/Fribourg
Switzerland
www.lem.com