LEMI Holding Q1 preview: Inventory build likely supportive

Research evidence excerpt

LEMI Holding Q1 preview: Inventory build likely supportive

LEM Holding UBS Research

Estimate changes

Ahead of the company's Q1 results - due on 28 July 2026 - we tweak our estimates. We

leave our top-line results broadly unchanged, but now expect the company's mid-term

EBIT margin target of 10-15% could be achieved in the current fiscal year as the

company's cost cutting, combined with operating leverage should support further

margin uplift. We note last year's Q1 was still under significant margin pressure, at 5.5%

EBIT margin, providing for a low comparison base. Q2-Q4 2025/26 have recorded

improved margins of 8.4-9.9%. As a reminder, mid-term guidance was updated with

the publication of H1 25/26 numbers, and the top-line organic growth target of 4-7%

was reiterated, at margins of 10-15%. Previously, LEM was aiming for CHF600m sales by

FY29/30, at EBIT margins of around 20%. The company's cost program, which was

announced in November 2024, aimed to take out CHF35m of annual costs.

Figure 1: Estimate changes

Estimate chan ges

Source: Company data, UBS estimates

In FY 26/27 we expect growth to be front-end loaded in H1, expecting continued

momentum from solid order growth in Q4 25/26, mostly due to inventory build up amid

geopolitical tensions. However, our channel checks are indicating clients are starting to

reduce forecasts for H2 26/27. For Q1/Q2 we therefore expect sequential qoq growth of

7%/3% before flattening out for Q3/Q4. While we continue to expect underutilization

of LEM's production facilities, we assume top-line growth to be somewhat limited by

supply chain constraints. This however could prove to be supportive for the group

margin, as the company prioritises higher margin business, we believe. Accordingly, we