Results
3rd quarter of 2014/15
1 October 2014 to 31 December 201417 February 2015

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

1. Global Market Leader in Current and Voltage Transducers
Market Position

Performance

Perspectives

 Continued sales
growth and margin
improvements
 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%Source: Swissquote Global market shareof 50% in Industry
 Benchmark in service
and product quality
 4 production sites inEurope and Asia
 Sales of CHF 245.6
million in 2013/14

3

1. LEM Applications: Robot
Industrial robots require movements in 3-6
axes in order to move the end of the arm inevery position. Applications are accomplishedwith high endurance, speed and precision.
The robot arm is moved by electrical motors:
usually one motor for each axis. The power
inverter (2) the motor (3) from one position tothe next and stops precisely in position. To doso, an accurate measurement of the current
is needed.

A CASR
1 Control Unit
2 Inverter
3 MotorTransducers (A) are used to measure thecurrent and, together with the position
sensor, they are responsible for controllingthe fast movement and the precision to stop
the arm in the new position.
4

1. LEM Applications:
Formula 1 Energy Recovery System

4A

HC5 FW
5
6
1

1 Pedals (accelerator, break)
2 Turbocharger
3 MGU-K
4 MGU-H
5 Battery
6 ERS break pressure valve
7 Engine control unit

37 A

22014 Formula 1 cars include a revised energy
recovery system (ERS). Engine specificationsimpose a 440 kW turbocharged (2) engine
combined with an ERS (3, 4) providing
additional 120 kW for over 30 seconds per lap.
The ERS uses two distinct energy sources toprovide the extra power: kinetic energy frombraking and thermal energy from the exhaustgases. The energy is converted into electricity.
The electricity is fed into a battery (5) andcontrolled by the ERS control unit (7).
LEM's HC5 FW (A) family of automotive current
transducers measure the electric currents
generated by each source, and allow thecontrol unit to make the best decision of howand where to direct the available power.
5

1. LEM Applications: Locomotive

A LTC 100

B DVL

1A5A
31

B

Additional inverters are used for heating, airconditioning and ventilation. Transducers (A)are used to measure the motor currents inorder to optimize their efficiency.

42
4Inverters (3) are used to transform the energy
into the right voltage and current to drive themotors (4). Voltage and current transducers(A,B) are used to measure the current and thevoltage on the secondary side of thetransformer (2) and on the DC-side. Specialdifferential transducers are implemented at
the secondary side of the transformer todetect any leakage current flowing in the train.

1Pantograph

2 Transformer
43 Inverters
4 Motors
5 Auxiliary inverter61. LEM Applications:
Sewing Machine/Embroidery Machine47

Accuracy and speed of the table movements, aswell as the correct, accurate and regulated
rotation speed of the main axis for the needles
are directly linked to the currents provided to themotor (5) through a servo drive (1). The working
table (7) is moving in horizontal X and Y
directions thanks to linear motors (6) controlled
by two position servo drives (1).

352

661A

1 Servo drives
2 Control unit
3 Head4 Main axis
5 Motor6 Linear motors
7 Working table

Full servo control allows for speed and precision
in industrial sewing/embroidery machines.

A HLSR 10-P

Current transducers (A) are used in each servo
drive to measure two of its three phase output
AC currents. Their accuracy, high performance,high temperature working environment, lowtemperature drift contribute to a very stable,
quick, reactive, reliable and precise system.
71. Diverse Target Markets – Diversified Businesses
Businesses

Share of sales
9M of 2014/15

Green Cars
Conventional Cars

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

Agenda1. LEM at a Glance
2. Highlights and Business Review
3. Financial Review
4. Strategy and Outlook9

2. Highlights Q3 of 2014/15: High Operating Margins
In CHF millions, %9M 2014/15

9M 2014/15 vs.
9M 2013/14

Q3 2014/15 vs.
Q2 2014/15

Orders

190.4+4.1%

+3.0%

Sales

196.2+6.3%

-2.6%

EBIT

43.9+4.2%-11.0%Net profit

33.1+0.0%

+8.2%

■

Effective strategy execution turning into tangible results■

Sales growth and strong EBIT margin, above target range 15-20%■

Continued growth in in China■

Good success with recently launched products■

Q3 seasonal slowing due to fewer working days in December, but lesspronounced than expected102. Net Sales
In CHF millions
In CHF millions, %

300

Sales

9M vs. 9M
asreported

275
250
225
200

Industry

169.5

+7.1%

+9.1%

-1.9%

Automotive

26.7+2.1%

+3.8%

-6.7%

Total sales

196.2

+6.3%

+8.4%

-2.6%

175■

150125■10075

Q3 vs.
Q2
at constantcurrencies■

Seasonal effects in Industry in Q3 lesspronounced than expected
Customers’ inventory reductions in
Automotive
Negative currency impact on sales

50
25
0
10/11

11/12

12/13*

13/14

9M 14/15
11* Restatement following IAS 19R application (pensions)2. Quarterly ViewIn CHF millions

Book-to-bill ratio

807060

1.2
63.1

65.1

65.0

61.8

61.1
55.0

55.8

57.6

66.5

64.7
1.0

61.1
0.8

5040

 Seasonal recovery inbookings in Q3
 Customers’ requested
lead times and stocklevels continue to trend
downwards

0.6

30
0.4
20
0.2
100

0.0
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
12/13 12/13* 12/13 12/13* 13/14 13/14 13/14 13/14 14/15 14/15 14/15

Orders received* Restatement following IAS 19R application (pensions)

Sales

Book-to-Bill ratio12

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

Growth9M vs. 9M

GrowthQ3 vs. Q2

Asia andRoW

80.0+15.9%+3.5%

Europe71.5+3.5%-8.1%

N. America

18.0-11.0%

-0.2%

Total

169.5

+7.1%

-1.9%

North America
Asia and ROW

42%

47%

11%

 Challenging economic environmentin Europe North America continues to transfer
production capacities to Asia
 Asia the most important sales region
 Success with recently launched
products
13

2. Industry Segment: Business Development
In CHF millions

Op. EBIT in % of sales
25280

20240

200
151601012080
5Businesses and Applications
Drives & welding (growth Q3 vs. Q2: -7%)
 Transfer of customers’ production to Asia
 Impact from seasonal factors and weak
European economy
Renewable energies & power supplies (-1%)
 Resisted usual slow-down during winter months
 Strong activities in China and India
 Continued weakness in North AmericaTraction (+10%) Growing infrastructure investments
 High activity in high speed trains in China andlight rail in many regions

4000
10/11

11/12

12/13*

13/14

9M 14/15

High-precision (-4%)
 Low investments in test & measurement markets
 Stable medical applications
14* Restatement following IAS 19R application (pensions)2. Automotive Segment: Regional Markets
EuropeIn CHF millions, %Sales

Growth9M vs. 9M

GrowthQ3 vs. Q2

Asia andRoW

11.7+16.6%+1.9%

Europe1.9-18.3%+7.2%

N. America

13.1

-5.1%

-15.8%

Total

26.7+2.1%-6.7%

North America
Asia and Rest of World

7%

44%

Focus on Asian and North Americanmarkets
 Good growth in Asia
 New projects in green cars
businesses in China and Korea
49%152. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales
2540352030251520

Businesses and Applications
Conventional cars (growth Q3 vs. Q2: -10%)
 International car makers reducing production
and inventories before year-end
Green cars (HEV, EV) (+10%)
 Small project wins in the Chinese andKorean market for hybrid cars
 Successes with new products
 Lower activities in Europe

1015

10
5500
10/11

11/12

12/13*

13/14

9M 14/15
16* Restatement following IAS 19R application (pensions)2. Business Development ChinaProductionSales■■Market share of over 50%
Most important market with 27% oftotal sales■■

LEM China stabilizes its #1 position aslargest manufacturing site of the Group(58% of total production, compared to57% in financial year 2013/14)“Made by LEM” quality

In CHF millions

In CHF millions

60

160
140

50

120
40

100
8030

60

2040
10

20

0
10/11

11/12

12/13

13/14

9M 14/15

010/11

11/12

12/13

13/14

9M 14/15

17

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

18

3. Financial Highlights Q3 and 9M of 2014/15
 Seasonal decrease in sales in Q3 of 2014/15
 Maintained strong cost discipline Application of new CN-CH double taxation agreement resulting inreversal of withholding tax provision Robust profitability

19

3. Income Statement
In CHF millions

9M
2013/14

9M
2014/15

ChangeQ2
2014/15

Q3
2014/15

Change

Sales

184.5

196.2

+6.3%

66.5

64.7

-2.6%

Gross margin

46.5%

46.3%

-0.2pt

47.4%

46.2%

-1.1ptOperating expense

-43.6

-47.0

+7.6%

-15.4

-15.6

+1.3%

EBIT

42.1

43.9

+4.2%

16.0

14.3

-11.0%Net financial exp.

-1.6-3.2+96.0%-2.0-1.4-28.3%

Income tax-7.3-7.5

+2.4%

-3.3

-1.2

-63.1%Net profit

33.1

33.1

+0.0%

10.8

11.7

+8.2%

20

3. Results by Quarter
In CHF millions

In % of sales

80
7030%
63.1

61.8

61.1
55.0

65.1

65.0

55.8

66.5

61.1

64.7

25%

57.6

60

20%

5015%
4010%

 Seventh consecutive
quarter with EBIT
margin above 20%
 Stable profitability
 Q4 of 2012/13 included
a restructuring charge ofCHF 1.9 million

305%

200%

100-5%Q1Q2Q3Q4
Q1
12/13 12/13* 12/13 12/13* 13/14
Orders received
Op. ROSQ2
Q3
Q4
13/14 13/14 13/14

Q1
Q2
Q3
14/15 14/15 14/15

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

In % of sales

14048%

9M
2013/149M
2014/15

Q2
2014/15

Q3
2014/15

85.8

90.8

31.5

29.9

46.5%

46.3%

47.4%

46.2%

47%

Gross margin

120

10046%in CHF millions

45%

Gross margin
in % of sales

44%

8043%
60

42%
41%

4040%
20

 Gross margin in line with last years'
margin, in accordance with seasonal sales
mix Positive impact due to continued relocation
to cost effective production sites

39%
038%
10/11

11/12

12/13*

13/14

9M 14/15
22* Restatement following IAS 19R application (pensions)3. Operating Expense
In CHF millions

In % of sales
30%

7060

25%

Operatingexpense9M
2013/14

9M
2014/15

Q2
2014/15

Q3
2014/15

43.6

47.0

15.4

15.6

23.6%

23.9%

23.2%

24.2%

in CHF millions
5020%

Operatingexpensein % of sales

4015%
3010%
205%

100 Higher administration expense driven by
LEM Bulgaria development and strategy
consultancy
 Ongoing strict cost control measures
 Operating expense as a percentage ofsales remain on low levels

0%
10/11

11/12

12/13*

13/14

9M 14/15
23* Restatement following IAS 19R application (pensions)3. R&D Expense
In CHF millions

In % of sales

16

9M
2013/14

9M
2014/15

Q2
2014/15

Q3
2014/15

10.9

11.1

3.5

3.7

5.9%

5.6%

5.3%

5.7%

8%

147%

126%

105%

84%

63%

42%

21%

0R&D
expensein CHF millions

R&D
expensein % of sales

 Maintained high investment in R&D for
both segments
 Ongoing renewal of product range withfocus on optimized cost, higheraccuracy, easier integration into
customers’ systems and new functions

0%
10/11

11/12

12/13*

13/14

9M 14/15
24* Restatement following IAS 19R application (pensions)3. EBITIn CHF millions

In % of sales

60

26%
24%

50

40

EBIT

22%

in CHF millions

20%

EBIT
in % of sales

9M
2013/14

9M
2014/15

Q2
2014/15

Q3
2014/15

42.1

43.9

16.0

14.3

22.8%

22.4%

24.1%

22.1%

18%3016%
14%

2012%

 Continued cost control and high grossmargins
 Profitability above target range of 15 to20%

10%

108%
06%
10/11

11/12

12/13*

13/14

9M 14/15
25* Restatement following IAS 19R application (pensions)3. Financial Expense
In CHF millions

9M
2013/14

9M
2014/15

Q2
2014/15

Q3
2014/15

Exchange effect*-1.6

-3.2

-2.0

-1.3

Other financial expense &income

-0.0

-0.0

+0.0

-0.1

Total-1.6-3.2-2.0-1.4



9M 2014/15 exchange effect mainly driven by hedge losses following
appreciation of CNY and USD vs. CHF

Foreign exchange hedging policy*EUR: 100% of net exposure 12 months forward

USD: 100% of net exposure 12 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.

26

3. Income Taxes
9M
2013/14
Expected income tax rate
Expected withholding tax rate
Expected tax rate
Adjustment in respect of previous period’s income tax
Other differences
Effective tax rate

16.1%
1.9%
18.0%
0.5%
-0.3%
18.1%

9M
2014/15
20.0%
1.4%
21.3%
-3.3%
0.4%
18.5%

 Higher expected tax rate due to the decision to abandon the HNTE
status in China
 Application of CN-CH double taxation agreement resulting in a one-off
reversal of withholding tax provision27

3. Net Profit
In CHF millions

In % of sales

Net profit
5020%

in CHF millions

Net profit

4518%

40

in % of sales

9M
2013/14

9M
2014/15Q2
2014/15

Q3
2014/15

33.1

33.1

10.8

11.7

18.0%

16.9%

16.2%

18.0%

9M 2013/14
16%

-1.6

35

-7.3
14%

30
25

42.1

33.1

12%
EBIT

2010%

Income tax

-3.2

8%

-7.5
43.9

33.1

6%

504%
10/11

11/12

12/13*

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

9M 14/15

Net profit

9M 2014/15

15
10

Financial expense

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 markets
through pure play components company
 diversification across geographiesand businesses30

4. Outlook■

Financial year 2014/15 outlook■ Sales of CHF 250 to 260 million■ EBIT about CHF 54 million■Swiss franc appreciation vs. major currencies■ LEM expects a negative currency impact on EBIT ofCHF 3 million in Q4 of 2014/15■ LEM to benefit from its established foreign exchange
hedging policy

31Organization Change■■■

After 6 successful years as CFO at LEM, Julius Renk has
decided to leave the CompanyTransition to new CFO■ Julius Renk to assume full responsibility for LEM’s financial
year 2014/15 closing■ Julius Renk to support the Company in the transition of theCFO responsibilities■ LEM has initiated the search process for a successor
The Board of Directors and the Executive Management respect
his decision and thank Julius Renk for his excellent andessential contribution increasing LEM’s performance andenhancing LEM’s financial organization

32

Q&A

33

Financial Calendar and Contact Details
Financial calendar
4 June 2015
25 June 2015
30 June 2015
2 July 2015

Year-end 2014/15 results
Ordinary Shareholders’ Meeting for thefinancial year 2014/15
Dividend ex-date
Dividend payment date

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

34