Tomra Systems ASA (TMRAF) Q3 2024 Earnings Call Highlights: Strong Growth in Collection and Food Segments Amid Recycling Challenges

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tomra Systems ASA (TMRAF, Financial) reported a 6% revenue growth in Q3 2024, reaching EUR 326 million, driven by strong performance in the collection and food segments.
• The collection segment saw a 14% increase in revenue, attributed to growth in both existing and new markets, including significant contributions from North America and the launch of new products like the R2 reverse vending machine.
• The food segment experienced a 12% revenue growth, with improvements in order intake and backlog, reflecting successful restructuring efforts.
• Tomra Systems ASA (TMRAF) achieved a record high order backlog of EUR 134 million in the recycling segment, indicating strong future demand.
• The company reported a strong cash flow of EUR 99 million, highlighting effective working capital management and financial health.

Negative Points

• The recycling segment experienced an 18% decline in revenue due to lower volumes and a softer market, particularly in Europe.
• Operating expenses were EUR 97 million, slightly up compared to the same quarter last year, indicating ongoing cost pressures.
• The company faced a small one-off cost of EUR 0.5 million related to food restructuring, impacting overall profitability.
• Tomra Systems ASA (TMRAF) anticipates a slowdown in collection revenue in Q4 2024 compared to the strong performance in Q4 2023.
• The market sentiment in the plastic recycling sector remains weak, with no significant recovery expected in the near term.

Q & A Highlights

Q: On the recycling market, you mentioned a softer market but still expect growth for 2025. Can you provide more details on the expected growth range and visibility?
A: We see weaknesses in the plastic recycling market without a recovery yet, but other markets are compensating. Exact growth figures for next year will be shared in our Q4 presentation. – Tove Andersen, President & CEO

Q: With Poland's go-live date for the deposit return scheme now pushed to July, what rollout completion do you expect in 2025?
A: It's too early to detail Poland's rollout. We expect it to be gradual, similar to Romania, over a longer period rather than complete by July 2025. – Eva Sagemo, Chief Financial Officer

Q: You expect revenue to be down in collection in Q4. Is this year-over-year or quarter-over-quarter?
A: Revenue will be down compared to the strong Q4 last year and slightly softer than Q3 this year. We expect mid to high single-digit growth for the full year. – Eva Sagemo, Chief Financial Officer

Q: Can you provide some color on the split of growth from new and existing markets in collection this quarter?
A: We've seen good progress in new markets like Austria and Romania, and 8% growth in the US, an existing market, driven by volume increases in Connecticut. – Eva Sagemo, Chief Financial Officer

Q: Regarding the R2 reverse vending machine, how is it performing in existing markets?
A: The R2 was commercially launched in September and has been well-received, with over 100 units sold. It is expected to be a key growth factor in existing markets next year. – Tove Andersen, President & CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.