Results
1st Quarter 2018/19
1 April 2018 to 30 June 2018

31 July 2018

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

HOY / HOYA

2Results 1st quarter 2018/19

1. Global Market Leader
Market Position

Performance

Perspectives

LEHN

SMI
Source: Swissquote• Global market shareof 50+% in Industry• Strong market positionin the green cars
business• 4 production sites inEurope and Asia
• Benchmark in service
and product quality

3• Sales of CHF 301.2min 2017/18• Continued sales
growth and strong
margins• High and steady
dividend payout-ratio

Results 1st quarter 2018/19• Solid growth perspectives due to underlying
trends• Reinforced investment
in innovation• Strong foothold inChina and the rest ofAsia

1. Application: Stationary Battery
A CAB

32A

1

4

1 Battery
2 Inverter

Utility-scale battery storage is used to stabilize
the grid in remote areas with distributed
energy resources.
The control, protection, and state of charge
calculation of the battery require an accurate
measurement of the current into or out of thebattery. The biggest challenge is with small
standby currents that are very difficult tomeasure. Accumulated over a long period oftime, these small currents may bias the stateof charge estimation.
LEM's CAB 500 provides excellent accuracy
for both large and small currents. This allows
for an accurate state of charge calculation,
which improves the performance, working life,and reliability of the battery.

3 Grid4 Photovoltaic plant

4Results 1st quarter 2018/19

1. Application: Refrigerator Truck
The refrigerated truck is used to store anddeliver fresh goods like fruits, vegetables, ormeat. Its electricity-powered refrigeration unit
is rooftop mounted and driven by the vehicle’sbattery.

A GO

21A
4

3

The refrigeration system has to be highly
efficient, i.e. energy efficient, quick to cool, andreliable. This requires good control of thecompressor’s motor, where current
measurement is a key parameter.
LEM’s GO is an economical, compact, reliable,
and accurate current measurement solution forrefrigeration and air conditioning applications.

1 Evaporator
2 Front mount condenser
3 Compressor
4 Controller

5Results 1st quarter 2018/19

1. Application: Track Circuit Monitoring

1A ATOA track circuit detects the presence of a train
on a rail block. It typically has power applied toeach rail and a relay wired across them. Whenno train is present, the relay is energized.
When a train approaches, its axles connect
the rails. The current to the track relay drops
and the relay is de-energized.

4

The condition-monitoring system identifies
deterioration in track circuit performance andalerts to allow maintenance before failure. It
provides early-stage detection of rail head or
wheel contamination, ballast or insulation
problems, and track circuit equipment faults.
This reduces the downtime of a railway line.

23A

1 Crossing gate
2 Lamp monitoring
3 Track circuit monitoring
4 Point machine

6Since existing signaling systems cannot be
modified without costly recertification, LEM’s
ATO, with its nonintrusive and easy setup, is
an ideal solution for retrofit purposes on track
circuit monitoring systems.

Results 1st quarter 2018/19

1. Application: Fuel Cell Car
Fuel cell electric vehicles (FCEVs) use apropulsion system similar to electric vehicles,
where energy is stored as hydrogen converted
to electricity by the fuel cell. The power
converter regulates the power between the fuelcell and the electric drive.

A HAM

564
32A
1A

1 Battery 12 V
2 Electric traction motor
3 DC-DC converter
4 Fuell-cell stack
5 Battery pack

In order to adapt the power between the fuelcell and the electric drive, the converter
monitors current and voltage from energy
storage elements (fuel cell, battery pack) torespond to the powertrain’s power needs.
LEM’s HAM measurement frequency is considerably higher than standard sensors. This isimportant for power electronics based on siliconcarbide or gallium nitride technologies withincreased efficiency and switching frequency.
Thus, HAM is highly suitable for technologies
used in fuel cell power converters.

6 Fuel tank (hydrogen)
7Results 1st quarter 2018/19

1. Diverse Target Markets – Diversified Businesses
Businesses

Share of sales
Q1 of 2018/19 Cyclicality

Green Cars

Macro drivers

Consumer durables Technology adoption (electrification),subsidies
Fuel savings

20%

Conventional Cars
High precision
Traction
Renewable energies& power supplies

Late cycle

Infrastructure investments

Mid cycle

Energy prices, subsidies

Early cycle

Industrial investment

80%

Drives & welding

Automotive segment
Industry segment
8Results 1st quarter 2018/19

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

9Results 1st quarter 2018/19

2. Strong Sales and Robust Margins
CHF m, %Q1 2018/19

Q1 2018/19 vs.
Q1 2017/18

Orders86.0+9.1%

Sales

88.0+16.0%

EBIT

18.5+16.1%

Net profit

13.5+1.8%••••

Positive economic momentum in Q1 2018/19
All businesses but the conventional cars contributed to sales growthRobust operating margins
Ongoing strategy execution with focus on innovation and development ofAutomotive organization• Increasing risks: introduction of new US-tariffs and reduction ofgovernment support for renewable energy in China

10Results 1st quarter 2018/19

2. Net Sales
CHF m

CHF m, %325

Q1 vs. Q1Sales

asreported

at constantcurrencies

300275

Industry

70.8+13.1%+7.2%

250

Automotive

17.3+29.8%+25.4%

225

Total

88.0

+16.0%+10.4%

200
175• Positive economic sentiment translated
into record sales• Sales growth in all regions and in mostbusinesses• Positive currency impact on sales

150
125
100
75
50
75.9

88.0

25
0
14/15

1115/16

16/17

17/18

Q1 18/19

Results 1st quarter 2018/19

2. Quarterly View
CHF mBook-to-bill ratio
88.0

90
80

75.9

1.15

76.2

76.3
72.8

70

66.9

1.10

66.8

65.7
65.1

60
1.05
50
40
1.00
30
20

0.95

1000.90

Q1
16/17

Q2
16/17

Q3
16/17

Q4
16/17

Q1
17/18

Orders received (left hand scale)Book-to-Bill ratio (right hand scale)

12

Q2
17/18

Q3
17/18

Q4
17/18

Sales (left hand scale)

Results 1st quarter 2018/19

Q118/19• Orders increased by
9.1% - slower than sales
growth of 16.0%• Book-to-bill ratio dropped
to 0.98 in Q1 of 18/19• Book-to-bill ratio below 1
for the first time since 7quarters

2. Industry Segment: Business Development
CHF m

EBIT in % of sales

25025%

20020%

150

15%

10050
62.6

Drives & welding (Q1 vs. Q1: +11.2%)• Robust growth in most regions, driven by
automation and robotics applications• Stable sales in China
Renewable energies & power supplies (+5.9%)• High demand from solar in Europe• Weakened sales in China due to reduced
government support for renewable energy• Pipeline of Smart-Grid projects

10%

Traction (+29.9%)• Increased infrastructure investments in allregions

5%

High-precision (+24.4%)• Growth in test & measurement market, mainly
for green cars and battery test benches

70.8

00%
14/15

13Businesses and Applications

15/16

16/17

17/18

Q1 18/19

Results 1st quarter 2018/19

2. Industry Segment: Regional Markets
EuropeNorth America
Asia and RoW

39%

51%

10%

14CHF m, %SalesGrowthQ1 vs. Q1Europe

27.5+21.6%N. America

7.2+13.7%

Asia and RoW

36.1+7.2%

Total

70.8+13.1%• Slowing sales in China after strong
sales growth in 2017/18• Strongest growth in Germany andEastern Europe• China the single most important
country representing 33.1% of sales• Orders increased by 6.4%

Results 1st quarter 2018/19

2. Automotive Segment: Business Development
CHF m

EBIT in % of sales

60

Businesses and Applications

25%

5020%

40
15%

3010%
20

Green cars (HEV, EV) (Q1 vs. Q1: +86.0%)• Asian green cars market growing fast
• Leading market position in China• Increasing activity from US and European carmanufacturers• Increasing consumer acceptance andgovernment support globally for green cars tounderpin future growth
Conventional cars (-14.5%)• Weaker US business linked to ongoing
technology change

5%1017.3
13.3

00%
14/15

15

15/16

16/17

17/18

Q1 18/19

Results 1st quarter 2018/19

2. Automotive Segment: Regional Markets
CHF m, %SalesGrowth
Q1 vs. Q1

Europe1.2+39.2%

N. America

4.1-12.7%

Asia and RoW

11.9+55.1%

Total

17.3

+29.8%

EuropeNorth America
Asia and RoW

7%

24%

69%

16• Sales numbers reflect destination ofproduct shipment, not OEM• Performance driven by green cars
business growth across all regions• Strongest growth in China, Koreaand Japan• Ongoing development of Automotiveorganization
Results 1st quarter 2018/19

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

HAT

17

Results 1st quarter 2018/19

3. Income Statement
CHF mFY
2017/18

18

Q1
2017/18

Q1
2018/19

ChangeSales

301.2

75.9

88.0

+16.0%

Gross margin

45.9%

46.0%

45.2%

-0.8ptOperating expense

-76.7

-18.9

-21.3

+12.3%

EBIT

61.7

16.0

18.5

+16.1%EBIT margin

20.5%

21.0%

21.1%

+0.1ptNet financial exp.

1.2

0.7-1.2

NM

Income tax-9.6-3.4-3.9+15.1%Net profit

53.3

13.3

13.5

+1.8%

Net profit margin

17.7%

17.5%

15.3%

-2.2ptResults 1st quarter 2018/19

3. Results by Quarter
In % of sales
24%

Avg. EBIT margin
20.8%

22%

20%

18%

Avg. net profit margin
17.0%

16%

14%

12%

10%
Q1 16/17

Q2 16/17

Q3 16/17

Q4 16/17

EBIT margin

19

Q1 17/18

Q2 17/18

Q3 17/18

Net Profit in % of sales

Results 1st quarter 2018/19

Q4 17/18

Q1 18/19

3. Gross Margin
CHF m

In % of sales
48%

14047%
120

Gross margin
CHF mFY
2017/18

Q1
2017/18

Q1
2018/19

138.4

34.9

39.8

45.9%

46.0%

45.2%

46%

Gross margin
10045%

in % of sales

44%
80• Price pressure and changing product43%
mix negatively affected the gross margin
42% •Increasing share of cost competitive
production and efficiency improvements
41%
counteracted negative effects

60

4040%
20

34.9

39.8
39%

038%
14/15

20

15/16

16/17

17/18Q1 18/19

Results 1st quarter 2018/19

3. SG&A
CHF m

In % of sales

6025%

SG&A
CHF m

SG&A

5020%

in % of sales

FY2017/18

Q12017/18

Q12018/19

55.0

14.2

14.8

18.3%

18.8%

16.8%

40

• Cost management through process
improvements and cost control• SG&A in percent of sales dropped by
10%
2.0%pt
15%

30

205%
10
14.2

14.8

17/18

Q1 18/19

00%
14/15

21

15/16

16/17

Results 1st quarter 2018/19

3. R&D Expense
CHF m

In % of sales

258%

R&D expense
CHF m

R&D expense

20in % of sales

FY2017/18

Q1
2017/18

Q1
2018/19

21.7

4.7

6.5

7.2%

6.2%

7.4%

6%

• R&D expenses increased by 38.6%,
reflecting the strategy to strengthen
4%technology leadership• Acquire new technologies to address
new markets
2%• Ongoing renewal of product portfolio

15

105
6.5
4.70%

014/152215/16

16/17

17/18

Q1 18/19

Results 1st quarter 2018/19

3. Financial Expense
CHF mFY
2017/18

Q1
2017/18

Q1
2018/19

Exchange effect+1.3+0.7-1.2

Other financial expense & income-0.2-0.0-0.0Total

+1.2

+0.7

-1.2

• Exchange effect mainly driven by appreciation of USD generating
foreign exchange losses on hedging positions

23Results 1st quarter 2018/19

3. Net Profit
CHF m% of sales

60

FY
2017/18

Q1
2017/18

Q1
2018/19

53.3

13.3

13.5

17.7%

17.5%

15.3%

20%

Net profit
18%

CHF mNet profit

5016%
14%
40

in % of sales

Net profit transition

12%
30

10%
- 1.8
8%

+ 2.5

206%

- 0.5

4%
10
13.3

13.5

14/15

242%
0%

015/16

16/17

17/18

Q1 18/19

13.5

13.3

Net profit Q1 EBIT variation
17/18

Results 1st quarter 2018/19

Financialexpense
variation

Income taxvariation

Net profit Q1
18/19

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

HAM

25

Results 1st quarter 2018/19

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 businesses

26

Results 1st quarter 2018/19

Shareholder Structure per 30 June 2018
Other34.2%

LEM Board andManagement*
0.2%
J. Safra Sarasin
Investmentfonds
AG3.2%

Werner O. Weberand Ueli
Wampfler**
50.0%

Ruth Wertheimer /7-Industries
Holding
12.4%* Excludes shareholdings of Ueli Wampfler andWerner C. Weber** Opting out clause introduced in LEM’s articles
of incorporation by the shareholders' meeting on
25 June 201027

Results 1st quarter 2018/19

Financial Calendar and Contact Details
Financial calendar
The financial year runs from 1 April to 31 March

6 November 2018
1 February 201922 May 201927 June 2019
2 July 2019
4 July 2019

Half-year results 2018/19
Third-quarter results 2018/19
Year-end results 2018/19
Annual General Meeting of Shareholders for 2018/19
Dividend ex-date
Dividend payment date

For further information
Andrea Borla, CFO
Phone: +41 22 706 12 50
E-mail: investor@lem.com

28Results 1st quarter 2018/19