Press release

LEM announces results for H1 2019/20: challenging economic
environment reduces sales while profitability remains stable
Fribourg, Switzerland, 05 November 2019 – LEM (SIX: LEHN), a leading global company inelectrical measurement for industry and automotive applications, announces first half results for
2019/20 (April-September) compared to 2018/19:•

Sales decreased by 5.9% to CHF 159.1 million (CHF 169.0 million); at constant exchange rates,
sales decreased by 4.0%

•The global spread of sales remains steady across different regions:– China CHF 54.7m (34.4% of total)– Europe CHF 48.2m (30.3% of total)– North America CHF 19.4m (12.2% of total)– Rest of World CHF 36.7m (23.1% of total)•

R&D up by 9.7% to CHF 14.3 million or 9.0% of sales (CHF 13.1 million or 7.7% of sales), driving
new product portfolio•

EBIT decreased by 10.7% to CHF 31.8 million (CHF 35.6 million); the EBIT margin declined to20.0% (21.0%)•Net profit for the period was down by 8.2% at CHF 25.1 million (CHF 27.3 million)•Free cash flow up 53.2% at CHF 23.5 million (CHF 15.3 million) reflects underlying strength ofbusinessFrank Rehfeld, Chief Executive Officer, said: “Our overall sales performance actually held up
reasonably well, considering the significant deterioration in the global economy over the past fewmonths. The industry business continues to be impacted by a lack of investment and confidence
amongst customers, while the speed of transition in the automotive business to green cars is subject
to changes in both government policies and the strategies of customers.
Our long-term outlook remains confident. The fundaments for LEM remain strong, driven by the mega
trends of energy efficiency, mobility and automation. Our investments in R&D are delivering a range of
new products for which early customer feedback is very promising. These include DC meter for electricvehicle chargers, sensors in semi-conductor packages, Rogowski coils for smart grid, and higher
current ranges in battery management and motor control.”Andrea Borla, Chief Financial Officer, added: “We continue to improve the gross margin, up from
45.9% to 46.7%, whilst maintaining strict control over SG&A in line with the drop in sales. This allowed
us to continue increasing R&D investments by 9.7% and keep the EBIT margin steady at 20.0%. Ourfull year guidance for sales around CHF 310 million reflects the difficult economic outlook in certain
key markets.”

LEM Holding SA

Page 1/6

Industry segment: mixed performanceH1 sales in the Industry segment totalled CHF 123.9 million, down 5.8%. At constant exchange rates,
sales decreased by 3.6%. H1 last year was comparatively strong but since then global economic
uncertainty means that customers are reluctant to invest, and this is particularly felt in our drives
business. Sales increased by 1.7% in China, but decreased by 10.5% in Europe, by 6.2% in North
America and by 7.7% in Rest of World.
in CHF millions

2019/20

2018/19

Change Comments

Businesses
Drives51.2

61.1

Renewable
Energy40.7

39.1

Traction

26.5

25.4

High precision

5.6

6.0

•
+4.2% ••
-6.5% •

Total Industry

123.9

131.6

-5.8%

-16.1% • Global reluctance to invest in production suchas welding and robotics• China & Japan sluggish demand+4.0% • Strongest in China, India & Japan
Europe solid performance
Investments helped by government policies
Growth in China, India & Asia

Market fundamentals remain good
• Adoption of new products subject toinvestment confidence

Automotive segment: China slow down offset by Europe, Japan and Korea
H1 sales in the Automotive segment totalled CHF 35.1 million, a decline of 6.1%. At constant exchange
rates, sales decreased by 5.2%. Sales in our green car business now accounts for 73.6% of Automotivesales, up from 66.5% a year ago, while our conventional car 12 volt battery business is declining asexpected. Sales in China suffer in comparison with H1 last year due to recent changes in government
policies and car launches, but in the long run we remain confident about the world’s largest market forgreen cars. Europe is benefiting from launches for new electric or hybrid vehicles, Korea is benefitingfrom demand for fuel cells and Japan is growing well due to motor control applications, while the US istransitioning from old technology at a slower rate. Sales dropped by 18.9% in China and by 32.0% in
North America, while they performed strongly both in Europe and Rest of World, up by 21.4% and39.0% respectively.
in CHF millions

2019/20

2018/19

Businesses
Green25.9

24.9

Conventional

9.3

12.5

Change Comments+4.0% • China influenced by policies, weakereconomy, and insourcing by Tier 1 suppliers• New motor control, battery management andcharging system products developed-26.1% • US passenger car sales continue to fall
• Old sensor technology being replaced as
anticipatedTotal Automotive

LEM Holding SA

35.1

37.4

-6.1%Page 2/6

Profitability remains steadyGross profit for the half year fell by 4.2% to CHF 74.3 million, although the gross margin reached46.7%, which is 80 basis points higher than the same period last year. We continued to shift production
to cost-effective locations, and executed various efficiency programs.
We remain vigilant with overheads, and reduced SG&A costs in line with the drop in sales to CHF 28.3
million (CHF 29.1 million). We continue with our long-term investment in future applications andincreased R&D investments by 9.7% to CHF 14.3 million (CHF 13.1 million), or 9.0% of sales (7.7%).
EBIT dropped by 10.7% to CHF 31.8 million (CHF 35.6 million), due to the decline in revenues partially
offset by the increase in gross margin. Our EBIT margin was down at 20.0% (21.0%).
We posted a net profit for the half year of CHF 25.1 million, down 8.2% from CHF 27.3 million last year,
reflecting the decline in EBIT, partially offset by lower taxes from the confirmed status of our Chinaoperations as a High New Technology Enterprise. The net profit margin was down at 15.8% comparedwith 16.2%.
Prudent outlook
Recent global economic data for purchasing, manufacturing and trade, suggest that certain key
markets are on the cusp of a recession. This environment will continue to impact LEM’s top line sales
performance for the coming months, although we expect the second half of 2019/20 to be in line with
our sales performance in the same period of last year.
For the full financial year 2019/20, the company expects sales of around CHF 310 million comparedwith CHF 321.6 million for the full financial year 2018/19. LEM expects its EBIT margin to remain close
to 20%.
Simplification of Swiss legal structure
In order to reduce complexity and simplify the internal processes, we plan to:• Sell technical IP from LEM Intellectual Property SA based in Fribourg to LEM International SA basedin Geneva. We expect a positive tax impact on the consolidated income statement 2019/20 ofaround CHF 13 million• Merge LEM International SA and LEM Switzerland SA on 30 June 2020
• Submit a proposal to the next Annual General Meeting of Shareholders to move LEM Holding SAfrom Fribourg to Geneva
Webcast and Financial Half Year ReportFrank Rehfeld, CEO, and Andrea Borla, CFO, will provide a detailed presentation of the half year
2019/20 results today at 10:00 CET at a media and investor community webcast.
Listen to live webcast
https://78449.choruscall.com/dataconf/productusers/lem/mediaframe/32760/indexl.html
The Financial Half Year Report and webcast slides are available in the Investor Relations section of
the LEM website (www.lem.com/en/investors), where the webcast will later also be archived.
Dial-In Numbers
Switzerland & Europe: +41 (0)58 310 50 00UK:+44 (0) 207 107 06 13
USA:+1 (1) 631 570 56 13
Other countries: https://media.choruscall.ch/documents/Attended_DI_numbers.pdf

LEM Holding SAPage 3/6

Financial calendar
The financial year runs from 1 April to 31 March
5 November 2019
Half year results 2019/20
31 January 2020
9 months results 2019/20
19 May 2020
Full year results 2019/20
9 June 2020
Annual General Meeting of Shareholders for the financial year 2019/20
16 June 2020
Dividend ex-date
18 June 2020
Dividend payment date
LEM – Life Energy Motion
A leading company in electrical measurement, LEM engineers the best solutions for energy andmobility, ensuring that our customers’ systems are optimized, reliable and safe.
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 renewableenergy, mobility, automation and digitization.
With innovative electrical solutions, we are helping our customers and society accelerate the transition
to a sustainable future.
Listed on the SIX Swiss Exchange since 1986, the company’s ticker symbol is LEHN.
www.lem.com
For further information please contact
Andrea Borla (CFO)
Phone: +41 22 706 1250
Email: investor@lem.com

LEM Holding SA

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Appendix
Consolidated income statement
April to September
2019/20

In CHF thousands

2018/19

Change-5.9%

Sales

159'054

168'982

Cost of goods sold(84'722)(91'375)

Gross margin

74'33377'607Gross margin (in %)

46.7%

45.9%

Sales expense(14'581)(15'296)

Administration expense(13'747)(13'824)

Research & development expense(14'334)(13'067)

Other expense(0)0

Other income90133

EBIT

31'76235'553

EBIT margin (in %)

20.0%

21.0%

Financial expense

(357)

(112)

Financial income

10855

Foreign exchange effect(1'189)(1'047)

Profit before taxes

30'32334'449

Income taxes(5'233)(7'120)Net profit of the period

25'08927'329Net profit margin (in %)

15.8%

16.2%

LEM Holding SA-4.2%-10.7%-12.0%-8.2%

Page 5/6

Key Figures
2019/20in CHF millions

Orders received

Q1

Q2

Industry

71.3

Automotive

17.2

Total LEM

88.4

Q3

Q2

Q3

Q4

FY

54.8

68.0

56.657.563.6

245.7

-3.2%

+1.1%

17.2

17.9

23.5

15.1

18.2

74.7

-26.7%-17.0%

72.0

86.0

80.0

72.6

81.8

320.5

-10.1%-3.4%

H1 - H1

Q1Q2

Q1Q2

Q3Q4

FY

Q2 - Q2

H1 - H1

Industry

1.10

0.92

0.96

0.93

0.99

1.05

0.98

-0.8%

+7.1%

Automotive

0.95

1.00

1.04

1.16

0.85

1.13

1.05

-13.8%-11.2%

Total LEM

1.07

0.94

0.98

0.99

0.95

1.07

1.00

-4.8%

+2.4%

Sales

Q1Q2

Q1Q2

Q3

Q4

FY

Q2 - Q2

H1 - H1

Industry64.6

59.3

70.8

60.8

58.3

60.4

250.2

-2.5%

-5.8%

Automotive

18.0

17.1

17.3

20.1

17.8

16.1

71.4

-15.0%-6.1%

Total LEM

82.6

76.4

88.0

80.9

76.1

76.5

321.6

-5.6%

-5.9%

EBIT

Q1

Q2

Q1

Q2

Q3

Q4

FY

Q2 - Q2

H1 - H1

Industry

14.3

13.2

15.8

13.0

12.1

14.0

54.9

+1.6%

-4.4%

Automotive

2.4

1.9

2.8

4.0

3.2

0.0

9.9

-53.1%-37.3%

Total LEM

16.7

15.1

18.5

17.0

15.2

14.0

64.8

-11.2%-10.7%Net profit

Q1Q2Total LEM

13.9

11.2

LEM Holding SA

Q3

Q3Q4Q4

Q4FY

Q2 - Q2

Book-to-bill ratio

Q3Q4FYChange

Q1Q3Q42018/19

FYFYFY

Q1Q2

Q3

Q4FY

Q2 - Q2

H1 - H1

13.5

13.8

11.6

13.4

52.4

-18.9%-8.2%

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