LEM Holding S.A.

Good morning, ladies and gentlemen, and welcome to the Lamb Holding SA half-year results 2025-26. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Mark Nathan, CEO.

Thank you very much. Good morning, ladies and gentlemen, and a warm welcome to the presentation of our half-year results 2025-26. My name is Frank Rehfeldt. I'm the CEO of LEM, and I'm here together with Antoine Julia, our CFO. For those who are not yet familiar with LEM, LEM is providing sensors for measuring electrical parameters, namely current, voltage, and energy, and with those help our customers and society to transition to a sustainable future. Here you see the agenda for today's presentation. After my opening remarks, I will give you more detail on the business performance of LEM. Antoine Trulia, our CFO, will then introduce the financial results, and I'm going to outline what we expect in the future, as well as talk about the adjustments we did with respect to our mid-term ambitions. As you might remember, we had a tough start into 25-26. Flat sales at constant currencies in comparison to the previous year. However, both the gross margin and consequently also the EBIT margin were under pressure in Q1. Despite not seeing a significant improvement on the top line in constant currencies in Q2, we managed to improve in due to both before mentioned KPIs and Antoine will go here in greater detail. For the first six months, the 5.3% decline in our top line can be fully attributed to FX losses, whereas the segments growing and those declining were balancing out each other. We were in particular happy with the developments in automation, automotive, and track in thought with momentum in China. We are also happy to share that we are fully on track with our fit for growth program that helps us to trim our indirect cost. You might also remember that we reported 12 million negative cash flow a year ago and managed to improve the cash flow to 5.6 million in 25, 26 first half. We will come to the guidance for this year that you see here in the numbers, as well as the updated mid-term financial ambitions at the end of the presentation again. Now with that, let's move on to the business performance in more detail. Our business structure, you see here the development of the five businesses in comparison to the same period in 24-25. I will focus on the numbers in constant currencies as you know that LEM is doing about 40% of its business in renminbi. That has been strongly depreciating after the announcement of the tariffs by the USA. We are happy to share that the automation business that started to slightly grow again after four rather flat quarters. Our automotive business with strong focus to China has been growing by 9% H1 versus H1 last year and saw an even more significant volume growth and the track business was growing even stronger. However, We also saw weak segments like renewable energy and energy distribution that I will explain in greater detail in the following slides. On this page, you see the distribution of our businesses relative to each other. What becomes clear is that there has been movement in all businesses. Looking at our two biggest businesses first, Automation grew in particular in the second quarter nicely by more than 4% since inventories normalized and automotive, despite seeing a shrink in Q2 in CHF, continued to grow in REMEB. The businesses in the smaller segments have been changing positions. The very strong development of our traction business has been making it our third biggest business. First, renewable energy has been shrinking by 2% points, similar to the energy distribution and high-precision business that also lost 2 percentage points relative. Now let's go through the businesses one by one, starting with our biggest business, the automation business that almost represents 30% of our global business. You see a small growth in Q2 against Q2 last year, linked to normalized inventory levels as already mentioned. This growth materializes mainly in power levels above one kilowatt for LEM and happens across all regions. Nevertheless, there's a 3% reduction six months on six months that is to be attributed to currency in constant currencies. business has been growing by 3%. Our automotive business saw a nice growth of 9% in constant currencies, 2% in CHF. Growth areas were China and Europe, whereas in particular the Americas suffer from the policy changes the US administration has been implementing. We continue improving our market position in China. We are working mainly with Chinese OEMs and tier ones that we are expecting to further expand globally. We also saw positive momentum in Europe with increasing new energy vehicle sales and the ramp up of some of our automotive products in the market. Rest of Asia depends very much on exports that will be in particular towards the Americas if we don't see a short-term change coming. Renewable energy representing now 14% of our global business declined in constant currencies by 15%. Despite growing photovoltaic installations, the average content of current sensing by inverter is going to further decline step by step and the price pressure is going to remain high. We're expecting this to remain a segment that is as competitive as automotive. The developments in Europe go into two directions. Domestic solar will be completely dominated by Chinese players and therefore served by us in China. various large commercial projects will see European sources, and we expect that we are restarting to grow in this sub-segment with our European customers. Notable are the positive developments in rest of Asia, both in Japan and India, with local government investments that we expect to continue. energy distribution and high precision business became our smallest segment with 13% of our total turnover and it also continued to shrink at 15% six months on six months. The lion's share in this segment is the DC metering for fast chargers that remained challenging both in Europe and the US as the new energy vehicle sales developed below the installation rates on the one hand. On the other hand, some of our customers also lost market share. The Chinese expert business for DC fast chargers remained stable. The acquisition sub-segments were rather weak due to lower demand in automotive EV testing, whereas the UPS, the uninterruptible power supplies, were nicely picking up to the increasing installations in data centers. Looking at the track business was the surely biggest fund in this quarter. This takes up now 17% of our total business and developed with a growth rate of 15% in constant currencies, very positively. The development happened across all regions based on the ongoing investment into public infrastructure and the increasing standardization of regulations across Europe. The consequence of this standardization is that this requires to retrofit energy meters across the whole of Europe. Projecting this business now from a regional perspective, we see important changes in comparison to last year. Our business share in China remained stable at constant currencies, however, shrank due to the depreciation of the renminbi. Therefore, it takes now 37% of our total business, two percentage points less than for the first six months last year. The segments automation, automotive, and track contributed, as previously mentioned. The rest of Asia business showed a slight growth six months over six months and an even nicer growth in Q2 with more than 12%. The main contribution was coming here from traction. Just to report here the progress of our plant in Malaysia. We are meanwhile producing the same volume than in Bulgaria despite the fact that the sales share is still substantially lower. And we see an increasing demand of customers who look for either a dual sourcing, both from China and Malaysia, or even a relocation of their production towards Malaysia. This confirms our strategic decision to set up this new site that, on the other hand, is still burdening our P&L since it reduces the overall loading of our manufacturing footprint. Clearly disappointing sales in EMEA, shrinking 7% over six months, where the reduction in EDHP and renewable was balanced out by automotive traction and automation. The Americas numbers are including the tariffs that we are passing on to our customers, and the business is overall stable, albeit below expectations, looking at the development in automotives. Nevertheless, the successes with catalogue distributors give us positive signals for the future. With this, I would like to hand over to Antoine for the financial results.

Thanks, Frank. Good morning, everyone. Thank you for joining our Q2 Learning School, and I'm Antoine Schuminger, Chief Financial Officer. I'm happy to walk you through LEM's financial performance for the period ending September 30th. 2025, probably showing a welcome recovery trend after some challenging results recently. As Frank explained, at $148 million in Swiss franc, our sales declined by 5% in the first half of the year, which translated to a positive growth of 0.5% at constant exchange rate. Q2 saw a slightly higher performance at minus 4% or plus 1.2% at constant exchange rate. Our gross margin dropped by almost 15% to 59 million in the first half, mainly due to forex, price, and mix. But Q2 showed early signs of recovery at 30 million, down roughly 10% from Q2 last year. Thanks to a large reduction in operational expenditures under the Fit for Growth program, EBIT reached 11.4 million in the first half, of which 7.2 million in Q2. an increase of more than 7% from the prior year. This represents about 7.7% of return on sales for the half year, and just south of 10% for Q2. Now, before structuring costs, this margin is topping 11%. As we reported in Q1, our gross margins slipped in H1 from prior year's level, just south of 40% of revenue. This is a 400 bps drop. Now, we observed a 150 basis point recovery in Q2 following the Q1 drop due to price pressures pretty much across the business spectrum but driven by China in renewable and industry in particular. We've explained some of these pressures by overcapacity in some of these markets combined with an aggressive commercial stance since the end of last year that we've started to adjust towards a more selective approach. In addition, supply activity in Q2 is coming with better manufacturing and sourcing variance contribution. Our SG&A spend landed on $31.5 million for the first half, in sharp decline from the prior year by 13%, and with further sequential savings in Q2. These savings are heavily concentrated on the general and admin expenses, both in personnel and non-personnel, leveraging reduction in force as well as productivity gains from our Pulse program, with our recent ERP implementation. In addition to the SG&A reduction, savings in R&D were achieved with Fit for Growth through a reduction in overall R&D personnel, but more importantly, in alignment of our footprint towards Asia. This yields a reduction of more than 20%, which is enabled by constant prioritization of R&D efforts as we aim to increase the overall R&D efficiency and time to market. Our financial results improved by $1 million to a $30 million loss for the half-year period. The loss is mainly driven by the service cost of our debt, but the improvement from last year stems from a more favorable forex track. Income tax-wise, we're back to our historical effective tax rate performance, around 18%, on par with last year's, especially in the second half. The first half performance last year was lifted by a favorable one-time affecting the country tax mix, both in expected and effective rates. So our overall P&L performance in H1 shows an overall compression from the prior year, landing on a net profit of 6.8% of sales, representing a 90 basis points drop. This flipped in Q2, though, thanks to a recovery on all lines. except for revenue. Margin rate improved, and both operational expenses and financial expenses decreased further, yielding to both operational and net profits well above last year at $7.2 and $4.8 million, respectively. Working capital inflated due to large cash out payments since March, including severance and separation costs in the context of the Fit for Growth program. Our net debt position improved in the meantime as we continue to de-risk and de-leverage this balance sheet and aiming for and lending above 40% equity ratio. Aside from cost control, we focused our efforts this past semester on cash management, generating 5.6 million free cash flow to the firm from a large burn of 11.6 million in the prior year. On a lower profit and EBITDA than last year, and in spite of large restructuring outlays, We've managed to stay on top and lift our operating flows and reduce our capital expenditures and tax flows. This cash flow focus will remain one of our core priorities in the current environment. So with this, I'll let it over to Frank who will explain on how we see this environment moving forward.