Results
Q1 of 2013/14
1 April 2013 to 30 June 2013

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook2

1. About LEM■ LEM is the global market leader in providing innovative and high quality
solutions for measuring electrical parameters.
■ The current and voltage transducers are used in a broad range of industry
and automotive applications.
■ LEM is a high growth global company with approximately 1’200 employees.
Production plants are in Beijing (China), Geneva (Switzerland), Machida(Japan) and from October 2013 Sofia (Bulgaria). With regional sales offices
close to the customers’ locations, LEM provides a seamless service.
■ LEM (SIX: LEHN) has been listed on the SIX Swiss Exchange since 1986
and has a market cap of CHF 693 million per 30.6.2013.
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 slidingdoors. 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 CABCD HAH3HC5AB

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 C2
341 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 CraneA crane can be moved on rails over the groundsurface normally driven by four motors. Thetrolley runs along rails that are located on topor 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

51
1

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

1 Ground surface move motors
2 Hoist motor

113 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.

424

Inverters 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 differential
transducers are implemented at thesecondary side of the transformer to detect
any leakage current flowing in the train.

1 Pantograph
2 Transformer

4

3 Inverters
4 Motors
5 Auxiliary inverter71. LEM Production & Logistics World-Wide

Production Centers (PDCs)
Adaptation Center
Sales Offices
Agents / Distributors
8

1. LEM at a Glance – Businesses
Industry segment
Drives & welding

Automotive segment
Conventional cars

Motor drives■ Welding■ Miscellaneous■■Renewable energies &power suppliesSolar■ Wind■ UPS■ Battery monitoring, processcontrol, energy metering■

Lead battery management■ Start-stop application

Green cars (HEV, EV)
Battery pack management■ Electric motor control■ Embedded charger■Traction
On-board applications■ Trackside■ Energy monitoring■High precision
Medical scanner■ Test & measurement■

9Agenda
1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook10

2. Highlights Q1 2013/14: Increased Margins
In CHF million, %Q1 2013/14

Q1 vs. Q1 2012/13

Q1 vs. Q4 2012/13

Orders

65.1

+7.2%

+10.8%

Sales61.8-2.1%+10.8%

EBIT

13.3+16.7%+101.3%Net earnings

9.8-10.7%+147.8%■Continued stabilization in Industry businesses■

Automotive businesses held back by customers’ inventory corrections andslowing green cars business■

Operating margin above target range of 15 to 20%■

Stabilization of the business at the current level112. Net Sales
In CHF millions

In CHF million, %

300

Sales

Q1 vs. Q1

Q1 vs. Q4

Industry

53.5

-0.1%

+12.4%

275

Automotive8.3-13.2%+1.5%

250

Total sales

61.8-2.1%+10.8%

225
200■

175150■125
10075

Recovery in Industry businesses in
Asia and North America
Automotive businesses restrainedby inventory corrections and weakgreen cars business

50
25
0
09/10

10/11

11/12

12/13

Q1 13/14

122. Quarterly View
In CHF millions
70.0

Book‐to‐bill ratio

67.7

1.2
63.1

61.8

61.1

57.9

60.0

55.0

55.0

1.0

55.8

55.7
50.0
0.8
40.0

 Book-to-bill ratio >1 forsecond consecutivequarter Lead times requested
by customers getting
ever shorter

0.6
30.0
0.4
20.0
0.2

10.0

0.0

0.0

Q1
11/12

Q211/12

Q3
11/12

Q4
11/12

Orders received

Q1
12/13

Q2
12/13

Sales

Q3
12/13

Q4
12/13

Book-to-Bill ratio

Q1
13/14
13

2. Industry Segment: Regional Markets
EuropeIn CHF million, %Sales

Q1 vs. Q1

Q1 vs. Q4

Europe23.3-12.1%-3.8%

N. America

7.4

-1.5%

+14.7%

Asia andROW

22.7+17.0%+34.9

Total

53.5

-0.1%+12.4%

North America
Asia and ROW

42%

44%

 European business still weak
 Double digit growth in Asia and NorthAmerica
 China remains #1 Industry market
14%

142. Industry Segment: Business DevelopmentBusinesses and Applications
In CHF millions

Op. EBIT in % of sales
25280

240

20200
15160

120

10Drives & welding (growth QoQ: +13%)
 Contribution from all regions
 Growth and market share increase in China
Renewable energies & power supplies (+31%)
 Seasonal effect in solar business Renewables markets in China an Japanbenefitting from government subsidies
 Consolidation in solar and wind markets
Traction (-14%)
 Delays of projects
 Restrained investments in rail infrastructure

80
540

00
09/10

10/11

11/12

12/13

Q1 13/14

High-precision (+6%)
 Increased market share in US medicalapplications15

2. Automotive Segment: Regional Markets
EuropeIn CHF million, %Sales

Q1 vs. Q1

Q1 vs. Q4

Europe0.5-39.2%-37.3%

N. America

4.6+1.0%+5.1%

Asia andROW

3.1-23.5%

+7.6%

Total

8.3

-13.2%+1.5%

North America
Asia and ROW

7%

37%

Conventional cars business drivingperformance Focus on Asian and North Americanmarkets
 Customers’ inventory corrections,mainly in the US

56%

16

2. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales
25302520201515101055Businesses and Applications
Conventional cars (growth QoQ: +8%)
 Growth in battery management
application
 Ramp-up of LEM’s new start-stopapplication faster than expectedGreen cars (HEV, EV) (-32%)
 Market burdened by high vehicle
prices Continued technological hurdles
 Limited success of electrical cars

009/10

10/11

11/12

12/13

Q1 13/14

0-5-10-15-5-10172. Business Development China
ProductionSales■■■Market share of over 50%
Market share increase in somedrives & welding applications
Biggest market with 24% of totalsales■■LEM China expands its #1 position aslargest manufacturing site of the Group(56% of total production, compared to51% in financial year 2012/13)“Made by LEM” quality

In CHF millions

In CHF millions
60120

50

100

40803060

2040

10

200
09/10

10/11

11/12

12/13

Q1 13/14

009/10

10/11

11/12

12/13

Q1 13/1418

2. New Production Plant in Sofia (Bulgaria)
 Objectives of the new site

Diversify LEM’s low cost production
Increase production capacity close to European customers
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&Dand marketing Machida (Japan) site to focus on local Japanese market

 Project on plan
 Investment of CHF 2 million into new site
 Ramp-up production as from October 201319

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook20

3. Income Statement
In CHF thousands,%Q12013/14Q4
2012/13

Q1 vs. Q4

Q1
2012/13

Q1 vs. Q1

Sales

61’81155’770+10.8%

63’118-2.1%

Gross margin

45.4%

37.6%

+7.8%pt

42.1%+3.3%pt

Operating costs-14’801-14’392+2.8%-15’224

-2.8%

EBIT

13’261

6’589+101.3%

11’359+16.7%

Financial expense (net)-1’361-1’257

+8.3%

1’501

N/A

Income tax-2’131-1’389+53.3%-2’140-0.5%

Net profit

9’770

3’943

+147.8%

10’720-8.9%

21

3. Results by Quarter
In CHF millions

In % of sales
25%1009080

20%67.77057.9

55.0

55.8

6061.8

61.1
63.1
55.0

55.8

15%5040

 Positive volume
leverage effect onmargins in Q1 of2013/14
 Q4 of 2012/13 includes
a restructuring charge ofCHF 1.9 million

10%

30
205%

1000%
Q1
11/12

Q2
11/12

Q3
11/12

Q4
11/12

Orders received
Op. ROS

Q1
12/13

Q2
12/13

Q3
12/13

Q4
12/13

Q1
13/14

Sales
Net Profit in % of sales

22

3. Gross Margin
In CHF millions

In % of sales

13048%

120

Gross margin47%

in CHF million

46%Gross margin

Q1
2012/13Q42012/13

Q1
2013/14

26.6

21.0

28.1

42.1%

37.6%

45.4%

110
10090

45%

80

44%

70

43%

60
5042%

40

41%

30

40%

2039%

10

in % of sales

 Positive impacts on gross margin
 Continued operating savings in COGS
 Continued relocation to low cost
manufacturing sites
 Q4 of 2012/13 includes a restructuring
charge of CHF 1.9 million

38%

0
09/10

10/11

11/12

12/13

Q1 13/14

23

3. Operating Expense
In CHF millions

In % of sales

Q1
2012/13

Q4
2012/13

Q1
2013/14

15.2

14.4

14.8

24.1%

25.8%

23.9%

30%

70Operatingexpense

60in CHF million
28%

50

Operatingexpensein % of sales

26%

40

30

24%

20

■ Ongoing strict cost control measures■ Operating expense as a percentage ofsales remain on low levels compared tohistorical average

22%10020%
09/10

10/11

11/12

12/13

Q1 13/14

24

3. R&D Expense
In CHF millions
16

In % of sales
8%

147%

R&D
expenseQ1
2012/13

Q4
2012/13

Q1
2013/14

3.5

3.9

3.9

5.5%

7.1%

6.3%

in CHF million
126%

105%

84%

63%

42%

21%

0R&D
expensein % of sales

 Maintained high investment in R&D for
both segments
 R&D expense above the long-term
average of 5.5%
 Ongoing renewal of product range withfocus on optimized cost, higher
accuracy and new functions

0%
09/10

10/11

11/12

12/13

Q1 13/14

25

3. EBITIn CHF millions
60

In % of sales

Q1
2012/13

Q4
2012/13

Q1
2013/14

11.4

6.6

13.3

18.0%

11.8%

21.5%

25%

EBIT
in CHF million

5020%

EBIT
in % of sales

4015%
3010%
20

 Profitability slightly above target rangeof 15 to 20%
 Q4 of 2012/13 EBIT includes arestructuring charge of CHF 1.9 million

5%100%

0
09/10

10/11

11/12

12/13

Q1 13/1426

3. Financial Expense
In CHF thousands

Exchange effect*
Other financial expense & incomeTotal

Q1
2012/13

Q1
2013/14Q4
2012/13

1’522-1’253-1’373

-21

-4

13

1’501

-1’257-1’361

 Q1 2013/14 exchange effect mainly driven by depreciation of CHF vs. EUR,
USD and JPY
 Foreign exchange hedging policy
 EUR: 100% of net exposure 18 months forward
 USD: 50-100% of net exposure 6-18 months forward*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. Net Profit
In CHF millions

In % of sales
20%

45

Net profit
in CHF million

Net profit
40

18%

35

in % of sales

Q1
2012/13

Q4
2012/13

Q1
2013/14

10.7

3.9

9.8

17.0%

7.1%

15.8%

+1.5

16%

-2.1

Q1 2012/133014%
11.4

25

10.7

12%
20EBIT

Financial expense

Income tax

Net profit

10%15-1.4-2.1

Q1 2013/148%

1013.39.86%

54%009/10

10/11

11/12

12/13

Q1 13/14

EBIT

Financial expense

Income tax

Net profit
28

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook29

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 marketsthrough pure play components company
 diversification across geographiesand markets30

4. Outlook■

Economic climate expected to remain volatile■For 2013/14 we expect■ Industry segment: progressive restart of sales in North
America and Asia, Europe to remain weak
■ Automotive segment: continued growth■

Further implementation of key strategic initiatives■

Operating margins to remain within target range of 15 to 20%

31

Financial Calendar and Contact Details
Financial calendar
13 November 2013 Half-year results of 2013/14
18 February 2014 Third quarter results of 2013/14
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

32