Results
Q1 of 2016/17

11 August 2016

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

HAH32

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

Performance

Perspectives

LEHN

SMI

Source: Swissquote Global market shareof 50+% in Industry
 Benchmark in service
and product quality
 4 production sites inEurope and Asia
 Sales of CHF 261.5
million in 2015/16

 Market capitalizationof CHF 1 billion
 Dividend yield >4% ineach year since 2009
 Continued sales
growth and strongmargins

 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:Hybrid Loader
A HTFS 800-P

61

2

3

5
4

1 Diesel engine
2 Generator
3 Inverter
4 Electrical motor
5 Transmission
6 BatteryA

A hybrid loader boosts fuel economy by up to25%, increases the system performance and ishalf as loud as a conventional loader.
The special internal combustion engine (1)drives an AC generator (2) for the bucket
moves. The generator converts the engine's
mechanical energy into electrical energy, whichis converted by the inverter (3) to supply theelectrical motor (4) to drive the transmission andthe wheels.
The currents are measured with current
transducers (A) to control the inverter. The
accuracy of the current measurements allows to
maximize the motor torque and overall motor
efficiency. The transducers also enable thecontrol system to sense over-current situations
signaling a potential defect.
41. LEM Applications:Hybrid-electric vehicles / electric vehicles
1 High voltage battery2 Charger

A DHAB V2

3 Motor controller
D CAB500

4 Electric motor and transaxle

D5 DC/DC converter

C HSN

1AB

2D3AC

4AC
5B HAH3Battery management
The battery management system (BMS)
adjusts the charging process through thecombustion engine in a hybrid-electric vehicle
or gives the information for external charging
of the high-voltage battery (1) in an electricvehicle. CAB (D), DHAB (A) provide allnecessary current information at highaccuracy level to the BMS to improve theefficiency of the charging process.
Motor control
The motor control (3) takes power from thebatteries and delivers it to the electric motor(4). The accelerator pedal gives the signals.
HAH3 (B), HSN (C) are integrated in theinverter modules (5) and provide current
signals at very high speed in order to assure
a smooth and jerk-free acceleration. 5

1. LEM Applications:
MV/LV substation
High voltage (HV) is adapted twice along its
way to consumers in order to simplify its
transmission and also in order to supply
applications with the right levels of voltage.

A ARTAThe last adaptation is realized inside a MV/LVsubstation adapting the voltage from mediumvoltage (MV) to low voltage (LV).

5342

1
1 Medium voltage (MV) side

4 Low voltage panel

2 Medium voltage switchgear

5 Smart meter3 Transformer

6 Low voltage (LV) side

6

Within the MV/LV substation, the incoming
power flow from the MV side (1) is managed
by the MV switchgear (2) before being
converted by the transformer (3) into LV (6).
The smart meter (5) installed in the LV panel(4) measures the transformer's (3) health withthree independent ART (A) current sensors. Its
design allows safe commissioning of the smart
meter on an operating transformer.
61. LEM Applications:
Locomotive

A LTC 100

B DVL

1A
5A
B
31

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 differential
transducers 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

Share of sales
Q1 of 2016/17 Cyclicality

Green Cars
Conventional Cars

18%

Macro drivers

Consumer durables Technology adoption (electrification)
Fuel savings

High precision
Late cycle

Infrastructure investments

Mid cycle

Energy prices, subsidies

Early cycle

Industrial investment

Traction
Renewable energies& power supplies
82%

Drives & welding

Automotive segment
Industry segment

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

LF20109

2. Highlights: Sales Growth and Strong EBIT Margin
In CHF millions, %Q1 2016/17

Q1 2016/17 vs.
Q1 2015/16

Orders

65.2

+7.2%

Sales

66.9+8.7%

EBIT

13.4+27.5%

Net profit

10.8+21.3%■

Sales growth in all regional markets■

Maintained high profitability■

Added production capacity for recently launched products■

Launched highly innovative digital output versions of HO and HLSR
open loop Hall Effect current transducers■

Increasing demand for LEM’s engineering and development support
102. Net Sales
In CHF millions

In CHF millions, %Sales

300
275

Q1 vs. Q1
asreported

at constantcurrencies

250

Industry

54.9+5.4%

+2.8%

225

Automotive

12.0+27.1%+24.2%

200

Total sales

66.9+8.7%

+6.1%

175

■

150125■

100■

Sales growth driven by drives & welding
and green cars businesses
Sales growth in China slowing
Positive currency impact

75
50
250
12/13*

13/14

14/15

15/16

Q1 16/17
11* Restatement following IAS 19R application (pensions)2. Quarterly View
In CHF millions

Book-to-bill ratio
1.280

70
1.0
60
0.8
500.640300.4

 Booking increased by
4.8% Q1 vs. Q4
 Market uncertainties andshrinking inventories atcustomers translating
into shorter term
bookings
 Book-to-bill ratio stable
at around 1 for the pastquarters

20
0.2
1000.0
Q1
14/15

Q2
14/15

Q3
14/15

Q4
14/15

Q1
15/16

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

Q2
15/16

Q3
15/16

Q4
15/16

Sales (left-hand scale)

Q116/17122. Industry Segment: Regional Markets
EuropeIn CHF millions, %Sales

GrowthQ1 vs. Q1

Europe21.6+10.2%

N. America

6.5+8.7%

Asia and RoW

26.8+1.2%

Total

54.9+5.4%

North America
Asia and RoW

39%
49%

12%

 Strong growth in Germany, France andUSA
 Mixed contribution of businesses
 China the single most important country
representing 31% of sales, but growthslowed13

2. Industry Segment: Business Development
In CHF millions

Op. EBIT in % of sales

240

25200
20160
15120
1080

54000
12/13*

13/14

14/1515/16

Q1 16/17

Businesses and Applications
Drives & welding (growth YoY: +18%)
 Better market environment in Europe and USA
 Increased activity in machinery and automationequipment
Renewable energies & power supplies (-6%)
 Seasonal upswing, but less pronounced than inprevious years
 Continued growth of renewable energies in China
 Slowing activity in Europe and North America due
to relocation of production capacities to China
Traction (-7%)
 Strong sales in Germany and India Drop in sales in China due to investments not yetplaced; catch-up expected
High-precision (+26%)
 Robust performance across regions andapplications
14* Restatement following IAS 19R application (pensions)2. Automotive Segment: Regional Markets
In CHF millions, %Europe

SalesGrowth
Q1 vs. Q1

Europe1.0+24.2%

N. America

4.9+5.7%

Asia and ROW

6.1+52.2%

Total

12.0+27.1%

North America
Asia and ROW
8%

51%
41%

 Performance driven by growth ofgreen cars business across allregions15

2. Automotive Segment: Business Development
In CHF millions

Op. EBIT in % of sales
25504520403515302510201510550Businesses and ApplicationsConventional cars (YoY: +2%)
 Stable demand for battery managementbusiness Growth in Europe – decreasing sales in USAand China
 Increasing use of smart-shunts for start/stopapplications
Green cars (HEV, EV) (+150%)
 LEM well represented in newly launched electricand hybrid-electric vehicles
 Won first fuel cell platform project with new
HAM sensor
 Increasing consumer acceptance and new
government support for green cars in Germany
to support future growth0
12/13*

13/14

14/15

15/16

Q1 16/17
16* Restatement following IAS 19R application (pensions)2. Business Development ChinaSalesProduction■■■

Market share of over 50%
Most important country with 30% oftotal sales■

LEM China maintained its #1 position aslargest manufacturing site of the Group(61% of total production, compared to64% in financial year 2015/16)“Made by LEM” quality

In CHF millions

In CHF millions

90

180

80

160

70

140

60

120

50

100

40

80

30

60

20

40

10

20
00
12/13

13/14

14/15

15/16

Q1 16/17

12/13

13/14

14/15

15/16

Q1 16/17
17

2. Business Development Sofia (Bulgaria)
Production
15 production lines relocated fromJapan and Switzerland to Bulgaria
Headcount at 188 FTE
Introduced a local development
team to support production

In CHF millions
30Objectives of the siteDiversify LEM’s cost-competitiveproduction
Increase production capacity close toEuropean customers
Increase natural hedge of operations
Absorb major part of LEM’s future
growth

25
2015
10
50
13/14

14/15

15/16

Q1 16/17
18

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

HLSR19

3. Income Statement
In CHF millions

FY2015/16

Q1
2015/16

Q12016/17Sales

261.5

61.5

66.9

+8.7%

Gross margin

46.0%

45.0%

45.7%

+0.7ptOperating expense

-67.5

-17.2

-17.2

+0.1%

EBIT

52.9

10.5

13.4

+27.5%Net financial exp.

+0.7

+0.5

+0.0

-96.5%

Income tax

-10.2

-2.1

-2.6

+25.1%Net profit

43.5

8.9

10.8

+21.3%

Change20

3. Results by Quarter
In CHF millions

In % of sales
24.1%

80

25%

23.5%
22.1%

70

20.8%

20.5%

60
50

16.8%

17.1%

20%

17.4%
16.2%

16.2%

20.0%

19.1%

18.0%
16.5%

19.6%

16.1%15.6%

15%

14.4%

4010%

30205%
1000%
Q1
14/15

Q2
14/15

Q3
14/15

Q414/15

Orders received (left-hand scale)
Op. ROS (right-hand scale)

Q1
15/16

Q2
15/16

Q3
15/16

Q415/16

Q1
16/17

Sales (left-hand scale)
Net Profit in % of sales (right-hand scale)21

3. Gross Margin
In CHF millions

In % of sales
48%

14047%
120

Gross margin

FY
2015/16

Q1
2015/16

Q1
2016/17

120.4

27.7

30.6

46.0%

45.0%

45.7%

in CHF millions
46%

Gross margin

10045%

in % of sales

44%

80

43%6042% Positive foreign exchange impact
 Continuous price pressure

41%

4040%
2039%
038%
12/13*

13/14

14/15

15/16

Q1 16/17
22* Restatement following IAS 19R application (pensions)3. SG&A
In CHF millions

In % of sales
25%

60

SG&A
in CHF millions

50

FY
2015/16

Q1
2015/16

Q1
2016/17

52.9

13.5

13.1

20.2%

21.9%

19.6%

20%

SG&A
in % of sales

4015%
3010%
205%
10

 Sales and administration expense in longterm average Ongoing recruitment in Beijing and Sofia
 One-off cost in Q1 of 2015/16 due toOrganizational changes, introduction ofnew ERP release, build-up of European
logistics and distribution platform

0%0
12/13*

13/14

14/15

15/16

Q1 16/17
23* Restatement following IAS 19R application (pensions)3. R&D Expense
In CHF millions

In % of sales
7%

156%

R&D expensein CHF millions

FY
2015/16

Q1
2015/16

Q1
2016/17

14.6

3.7

4.0

5.6%

6.0%

6.1%

125%

R&D expensein % of sales

94%

3%

62%
31%

0%

0
12/13*

13/14

14/15

15/16

Q1 16/17

 Continued investment in R&D for bothsegments
 Ongoing renewal of product range withfocus on optimized cost, higher
accuracy, easier integration into
customers’ systems and new functions
 Develop new technologies to tap newmarkets
24* Restatement following IAS 19R application (pensions)3. EBITIn CHF millions

In % of sales
25%

60

EBIT
50

in CHF millions

FY
2015/16

Q1
2015/16

Q1
2016/17

52.9

10.5

13.4

20.2%

17.1%

20.0%

20%

EBIT
40

in % of sales
15%

30
10%
205%

 Operational profitability maintained Positive foreign exchange impact ofCHF 1.8 million
 Continued cost control and productivity
improvements

1000%
12/13*

13/14

14/15

15/16

* Restatement following IAS 19R application (pensions)Q1 16/17

25

3. Financial Expense
In CHF millions*FY
2015/16

Q1
2015/16

Q1
2016/17

Exchange effect*+1.0+0.5+0.0

Other financial expense & income-0.2+0.0+0.0

Total+0.7+0.5+0.0

Foreign exchange hedging policy (unchanged)


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. Net Profit
In CHF millions

In % of sales

5020%

4518%

4016%

3514%

FY
2015/16

Q1
2015/16

Q1
2016/17

43.5

8.9

10.8

16.6%

14.4%

16.1%

Net profit
in CHF millions

Net profit
in % of sales

Q1 2015/16
+0.5

3012%

2510%

208%

156%

-2.1

10.5

EBIT

Financial expense

Income Tax

8.9
Net profit

Q1 2016/17+0.04%

102%

50-2.613.4

10.80%
12/13*

13/14

14/15

15/16

* Restatement following IAS 19R application (pensions)Q1 16/17

EBITFinancial expense

Income Tax

Net profit
27

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

HOY28

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

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

10 November 201616 February 2017
1 June 201722 June 201730 June 2017
4 July 2017

Half-year results 2016/17
Third quarter results 2016/17
Year-end results 2016/17
Ordinary General Meeting of Shareholders for the year 2016/17
Dividend ex-date
Dividend payment date

For further information
Andrea Borla, CFO
Phone: +41 22 706 12 50
Email: investor@lem.com
30