Results
3rd Quarter of 2013/14
1 October 2013 to 31 December 201318 February 2014

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook

2

Global Market Leader in Current and Voltage Transducers
Market Position

Performance

Perspectives

 Global market shareof 50% in Industry
 Benchmark in service
and product quality
 4 production sites inEurope and Asia
 Sales of CHF 235
million in 2012/13

 Continued sales
growth and margin
improvements 47.5% average total
shareholder returnp.a. (1/2009 to12/2013)
 Dividend yield >5% ineach year since 2009

 Reinforced investment in innovation
 Solid growth perspectives due to underlying trends
 Strong foothold inChina
 EBIT margin target of
15 to 20%3

1. LEM Applications: Elevator
22
3
BA LTSB LA 150-P

1

A

The controller moves the motor in the right
direction and lets it stop exactly at the rightposition to the floor ground, independent of
the weight in the elevator car. The current
transducers take care that the motor is
powered with the correct current.
Elevator doors are controlled by a control unitthat integrates the motors of the sliding
doors. The current transducer measures thecurrent in the motors to run the panels
smoothly and to discover if something (e.g., afinger, a leg) obstructs the doors.

1 Door control unit
2 Motor3 Controller

41. LEM Applications: Start-Stop System for Cars

A CAB

C

D HAH3

HC5

A

B

B
1B HABThe current sensors (HAB, CAB) allow thebattery management system to decide if
enough energy is available in the battery tooperate the accessories (such as airconditioning, headlights, and radio) while theengine is off, and still have ample charge left
to restart the engine.

5 C

23
41 Battery

D

The “power-control unit” will instruct the“starter generator” to restart the engine orrecharge the battery, as needed, and current
sensors (HC5, HAH3) used in the converters
and inverter modules allow it to operatesmoothly, improving the driver experience
while helping the environment.

2 Power control unit
3 Internal combustion engine
4 Starter generator
5 Rectifier

51. LEM Applications: Container Gantry Crane
A crane can be moved on rails over the groundsurface normally driven by four motors. Thetrolley runs along rails that are located on top
or sides of the boom and girder. The movement
is done with two motors located on the trolley.
Once the spreader locks onto a container, thecontainer is lifted and moved. The lift of thecontainer is done normally by one axis by avery sophisticated rope system and driven byone motor.

A LF 1005
A

4

3
2

5
1
1

Current transducers are used in all motor
inverters to satisfy all requirements for safe andaccurate movements.

1 Ground surface move motors2 Hoist motor

11

3 Trolley motor
4 Inverter and control cabinet
5 Spreader

61. LEM Applications: Locomotive

A LTC 100

B DVL

1A
5A
31

B

Additional inverters are used for heating, airconditioning and ventilation. Transducers areused to measure the motor currents in orderto optimize their efficiency.

42
4Inverters are used to transform the energy
into the right voltage and current to drive themotors. Voltage and current transducers areused to measure the current and the voltage
on the secondary side of the transformer andon the DC-side. Special differentialtransducers are implemented at thesecondary side of the transformer to detect
any leakage current flowing in the train.

1 Pantograph
2 Transformer

43 Inverters
4 Motors
5 Auxiliary inverter71. Diverse Target Markets – Diversified Businesses
Businesses
Green Cars
Conventional Cars

Share of sales
9M 2013/14
14%

High precision
Traction
Renewable energies& power supplies

Cyclicality

Macro drivers

Consumer durables

Technology adoption
Fuel savings

Late cycle

Infrastructure investments

Mid cycle

Energy prices, subsidies

Early cycle

Industrial investment

86%Drives & welding

Automotive segment
Industry segment

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

92. Highlights Q3 2013/14
In CHF million, %9M 2013/14

9M 2013/14 vs.
9M 2012/13*

Q3 vs. Q2 2013/14

Orders

183.0

+6.5%

-1.0%

Sales

184.5

+3.0%

-11.5%

EBIT

42.1+22.7%-29.8%Net profit

33.1+16.0%-41.8%■

Seasonal sales decrease in Q3 vs. Q2 with stable orders■

9M performance improved vs. 2012/13■

Efficiency and product mix resulted in strong margins■

Continued recovery in green cars business■

Ramp-up of production in Sofia, Bulgaria, on track

10* Restatement following IAS 19R application (pensions)2. Net Sales
In CHF millions
In CHF millions, %

300
275

9M
Sales

250
225
200

158.3

+3.9%

+6.0% -13.8%

Automotive

26.2

-2.4%

+0.7%

Total sales

184.5

+3.0%

+5.2% -11.5%■

125100■

7550
25

as
reportedQ3 vs.
Q2
at constantcurrencies

Industry

175
150

9M vs. 9M

■

+3.3%

Sales decrease in Q3 in Industry segment
due to fewer working days in December
and fewer solar installations in winterSales increase in Q3 in Automotive
segment due to pick up in green cars
business, mainly for hybrid cars
applications
Negative currency impact on sales

009/10

10/11

11/12

12/13

9M 13/14

11

2. Quarterly View
In CHF millions

Book-to-bill ratio
1.2

80

70

60

67.7

65.1
63.1

57.9

55.7
55.0

1.0

61.8

61.1
55.0

55.8

57.6

 Stable book-to-bill ratio Lead times requested
by customers remain
short

0.8

50

40

0.6

30
0.4
200.2
1000.0
Q1
Q2
Q3
Q4Q1
Q2
Q3
Q4
Q1Q2Q311/12 11/12 11/12 11/12 12/13 12/13* 12/13 12/13* 13/14 13/14 13/14
Orders received* Restatement following IAS 19R application (pensions)

Sales

Book-to-Bill ratio12

2. Industry Segment: Regional Markets
In CHF million, %

9M
Sales

Growth9M vs. 9M

GrowthQ3 vs. Q2

Europe

69.1

-2.6%

-11.3%

N. America

20.2-8.3%-13.7%

Asia andROW

69.1+16.2%-16.2%

Total

158.3

+3.9%

-13.8%

EuropeNorth America
Asia and ROW

44%

44%

 China expands its #1 position inIndustry
 Seasonal decrease in Q3 across allregions
13%

13

2. Industry Segment: Business Development
In CHF millions

Op. EBIT in % of sales
25280

20240

200
151601012080
54000
09/10

10/11

11/12

12/13

9M 13/14

Businesses and Applications
Drives & welding (growth Q3 vs. Q2: -15%)
 Weak demand worldwide
 Stable market share
Renewable energies & power supplies (-12%)
 Seasonal weakness
 Pick up of activities in smart-grid and offshorewindpark applications
Traction (-6%)
 Stable sales in Europe and North America Declining sales in Asia, competitive challenges
 Restrained investments in rail infrastructureHigh-precision (-37%)
 Weak test and measurement markets
 Stable medical applications
142. Automotive Segment: Regional Markets
In CHF million, %

9M
Sales

Growth9M vs. 9M

GrowthQ3 vs. Q2

Europe2.3+13.9%+7.7%

N. America

13.8+1.3%-2.5%

Asia andROW

10.1

-9.7%

+10.3%

Total

26.2-2.4%+3.3%

EuropeNorth America
Asia and Rest of World

9%

38%

Recovery of green cars applications,mainly in Europe and Asia
 Focus on Asian and North Americanmarkets
 Negative currency impact in USD andJPY of -3%
53%15

2. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales
204035

1530

Businesses and Applications
Conventional cars (growth Q3 vs. Q2: +2%)
 Performance reflects global car markets: flatin Europe, robust performance in Asia andthe US

25
1020
15

5

Green cars (HEV, EV) (+10%)
 Continued recovery mainly in Germany andJapan Higher activity in hybrid cars applications

10500
09/10
-5

10/11

11/12

12/13

9M 13/14-5-10-15-1016

2. Business Development China
ProductionSales■■

Market share of over 50%
Biggest market with 24% of totalsales■■

LEM China expands its #1 position aslargest manufacturing site of the Group(57% of total production, compared to51% in financial year 2012/13)“Made by LEM” quality

In CHF millions

In CHF millions

60

12050

100

40

80

30

60

2040

10

20

00
09/10

10/11

11/12

12/13

9M 13/14

09/10

10/11

11/12

12/13

9M 13/14
17

2. New Production Site in Sofia (Bulgaria)
Achievements






Objectives of the new siteInvestment of CHF 2 million into new site
Production started 1 October 2013
Delivery approvals from customers received
First products delivered to customers

Diversify LEM’s low cost production
Increase production capacity close to Europeancustomers
Increase natural hedge of operations
Absorb major part of LEM’s future growth

Continuation of strategy initiated in 2004


Production lines to be relocated from Machida (Japan) and Geneva (Switzerland)
to low cost countries
Geneva (Switzerland) site strengthened with investment in R&D and marketing
Machida (Japan) site to focus on local Japanese market
18

Agenda1. LEM at a Glance
2. Highlights and Business Review3. Financial Review
4. Strategy and Outlook

19

3. Financial Highlights
 Seasonal decrease in sales in Q3 of 2013/14
 Maintained strong cost discipline Gross margin at record levels and EBIT margin remains above
target range (15 to 20%)
 Slightly higher tax rate due to higher portion of profits in China, but
still at low levels20

3. Income Statement
In CHF millions

9M
2012/13*

9M
2013/14

ChangeQ2
2013/14Q3
2013/14

ChangeSales

179.2

184.5

+3.0%

65.1

57.6

-11.5%

Gross margin

43.3%

46.5%

+3.2pt

47.5%

46.5%

-1.0ptOperatingexpense

-43.3

-43.6

+0.8%

-13.9

-14.9

+6.8%

EBIT

34.3

42.1

+22.7%

17.0

11.9-29.8%

Financial expense
(net)

-0.2

-1.6

N/A

0.6

-0.9

N/A

Income tax

-5.5

-7.3

+32.7%-2.8-2.4-14.3%Net profit

28.6

33.1

+16.0%

14.8

8.6-41.8%

21* Restatement following IAS 19R application (pensions)3. Results by Quarter
In CHF millions

In % of sales
30%

80
70

67.7
63.1

60

57.9

55.0

61.8

61.1
55.0

55.8

25%

65.1
57.6

55.8

20%
5015%403010%20

 Q3 of 2013/14 includes
ramp-up cost for Sofia
site Third consecutive
quarter with EBIT
margin above targetrange
 Q4 of 2012/13 includes
a restructuring charge ofCHF 1.9 million

5%
1000%
Q1
11/12

Q2
11/12

Q3
11/12

Orders received

Q4
11/12

Q1
Q2
Q3
Q4
Q1
12/13 12/13* 12/13 12/13* 13/14
Sales

Op. ROS

Q2
13/14

Q3
13/14

Net Profit in % of sales
22* Restatement following IAS 19R application (pensions)3. Gross Margin
In CHF millions

In % of sales
47%14046%

12045%10044%
80

Gross margin

9M
2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

77.6

85.8

30.9

26.8

43.3%

46.5%

47.5%

46.5%

in CHF million

Gross margin
in % of sales

43%
42%

60

41%
4040%
20

 Positive impacts on gross margin
 Continued operating savings in COGS
 Continued relocation to low cost
manufacturing sites

39%

038%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

9M 13/14

23

3. Operating Expense
In CHF millions

In % of sales
30%

7060

25%

Operatingexpense

9M
2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

43.3

43.6

13.9

14.9

24.2%

23.6%

21.4%

25.8%

in CHF million
5020%

Operatingexpensein % of sales

4015%
3010%
205%

100 Ongoing strict cost control measures
 Operating expense as a percentage ofsales remain on low levels compared tohistorical average Q3 includes ramp-up cost for Sofia site

0%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

9M 13/14

243. R&D Expense
In CHF millions

In % of sales

1510%

R&D
expense128%

9M2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

10.8

10.9

3.4

3.6

6.0%

5.9%

5.3%

6.2%

in CHF million

R&D
expensein % of sales
96%

64%

32%0 Maintained high investment in R&D for
both segments
 Ongoing renewal of product range withfocus on optimized cost, higher
accuracy and new functions

0%
09/10

10/11

11/12

12/13** Restatement following IAS 19R application (pensions)

9M 13/14

25

3. EBITIn CHF millions

In % of sales
26%

60

24%
5022%
20%

4018%
30

16%
14%

2012%
10%

108%0EBITin CHF million

EBIT
in % of sales

9M
2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

34.3

42.1

17.0

11.9

19.2%

22.8%

26.1%

20.7%

 Continued cost control and high grossmargins
 In Q3 EBIT margin impacted by lower
volumes Profitability above target range of 15 to20%

6%
09/10

10/11

11/12

12/13R* Restatement following IAS 19R application (pensions)

9M 13/14

26

3. Financial Expense
In CHF millions

9M
2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

Exchange effect**-0.2-1.6

0.7-0.9

Other financial expense & income-0.0-0.0-0.0-0.0

Total-0.2-1.6

0.6-0.9

9M 2013/14 exchange effect mainly driven by appreciation of CHF vs. USDand JPYForeign exchange hedging policy adapted

EUR: 100% of net exposure 12 months forward

USD: 100% of net exposure 18 months forward* Restatement following IAS 19R application (pensions)** 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.

27

3. Income Taxes
9M
2012/13*

9M
2013/14

Expected income tax rate
Expected withholding tax rate
Expected tax rate

12.6%
2.7%
15.3%

16.1%
1.9%
18.0%

Other differences

0.9%

0.1%

Effective tax rate

16.2%

18.1%

 Slightly higher tax rate due to higher portion of profits in China
 Tax rate still at low levels

28* Restatement following IAS 19R application (pensions)3. Net Profit
In CHF millions

In % of sales
20%

45Net profit
in CHF million

4018%Net profit
in % of sales

35

9M
2012/13*

9M
2013/14Q2
2013/14Q3
2013/14

28.6

33.1

14.8

8.6

15.9%

18.0%

22.7%

14.9%

16%

9M 2012/13

30-0.2

14%

-5.5
34.3

25

28.6

12%
20

EBIT

Financial expense

Income tax

Net profit

10%15

9M 2013/14
8%

10-1.6
-7.3

50
09/10

10/11

11/12

12/13* 9M 13/14* Restatement following IAS 19R application (pensions)

6%

42.1

4%

EBIT

33.1

Financial expense

Income tax

Net profit
29Agenda
1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook30

4. Market Factors and Strategy■ We firmly believe in our strategic
direction and the 4 drivers for ourbusiness remain unchanged■ We will continue to capitalize on
the drivers of LEM’s markets
through pure play components company
 diversification across geographiesand businesses314. Outlook■Expectations for Q4 of 2013/14■ Stable performance in the automotive segment■ Seasonal recovery in the industry segment■Financial year 2013/14 outlook■ Sales of CHF 240 to 250 million■ EBIT around CHF 54 million

32

Financial Calendar and Contact Details
Financial calendar
4 June 2014
Year-end results and media and analyst conference
26 June 2014
Ordinary shareholders’ meeting for the year 2013/14
1 July 2014
Dividend ex-date
4 July 2014
Dividend payment date

For further information
Julius Renk, CFO
Tel: +41 22 706 12 50
Email: investor@lem.com
33