LEM Holding S.A.

LEM said H1 sales were CHF 148 million, down 5% reported and up 0.5% at constant exchange rates. Q2 sales were down 4% reported and up 1.2% constant currency. Gross margin was just above 40% of revenue in H1, down 400 bps year over year, and recovered by 150 bps in Q2. EBIT was CHF 11.4 million in H1, with CHF 7.2 million in Q2, and H1 free cash flow improved to CHF 5.6 million from a CHF 11.6 million burn last year. For the full year, management guided to sales of CHF 265 million to CHF 290 million and a high single-digit EBIT margin, and it updated midterm guidance to 4% to 7% annual growth in constant currencies and a 10% to 15% EBIT margin.

Frank Rehfeld framed the quarter as part of a tougher market reset driven by tariffs, FX, and stronger Chinese competition, but said LEM is adapting through Fit for Growth, a more selective commercial approach, and an Asia-leaning manufacturing footprint. He highlighted strength in Automation, Automotive and Track, especially in China, and said the company remains strategically committed to sustainability-driven growth, integrated current sensing, TMR, and DC metering even if the timeline to the old targets is longer.

Antoine Chulia emphasized that profitability improved despite softer revenue, with EBIT at CHF 11.4 million in H1 and gross margin recovering in Q2 to around 40% of sales. He cited CHF 31.5 million of SG&A in H1, down 13%, more than 20% lower R&D spending from Fit for Growth, and free cash flow of CHF 5.6 million versus a CHF 11.6 million outflow last year. He also said 40% gross margin is likely the new floor, while reaching 15% EBIT would require more than that floor and some favorable mix/volume.

Analysts focused on whether the old CHF 600 million revenue and 20% EBIT margin targets are now obsolete, and management said no, but the time to reach them is likely longer and 15% to 20% EBIT may be possible only further out. They also pressed on the 4% to 7% growth target and pricing, and management confirmed that volume growth must outpace price declines, with price drag still a headwind but expected to ease. On guidance, management said H2 should be weaker than H1 because of seasonality, softer China, and weaker renewable demand after feed-in tariff changes. Questions on cash flow, Nexperia supply, and the need for more restructuring were answered with cautious optimism: cash flow should stay positive, Nexperia had not materially affected LEM, and no extra restructuring is planned unless conditions deteriorate materially.