Earnings call transcript: Tomra Q3 2025 faces revenue dip amid market challenges

Tomra Systems ASA reported a revenue decline for the third quarter of 2025, with a 6% year-over-year drop to €306 million. Despite the challenging market conditions, the company’s gross margin improved slightly to 44% from 43% in the same period last year. According to InvestingPro data, the stock is currently trading near its 52-week low, with a P/E ratio of 9.03, suggesting potential value opportunity. The stock remained stable, with no change in its price following the earnings announcement.

Key Takeaways

• Tomra’s Q3 2025 revenue fell by 6% year-over-year to €306 million.
• Gross margin improved to 44% from 43% in Q3 2024.
• The recycling segment saw a significant 32% revenue decline.
• The company launched a new 4C sorter integrated with AI solutions.
• Tomra is targeting a 50% market share in new markets.

Company Performance

Tomra Systems ASA faced a challenging third quarter in 2025, with overall revenue declining by 6% compared to the previous year. The company’s collection segment revenue dropped by 5%, while the recycling division experienced a notable 32% decrease. However, the food segment showed resilience, with only a 2% decline. Despite these challenges, Tomra maintained its leadership position in reverse vending machines and continued to expand its market presence in Poland.

Financial Highlights

• Revenue: €306 million, down 6% year-over-year
• EBITDA: €30 million, representing a 10% margin
• Gross Margin: 44%, up from 43% in Q3 2024
• Collection Segment Revenue: €179 million, down 5% year-over-year
• Recycling Segment Revenue: €40 million, down 32% year-over-year
• Food Segment Revenue: €76 million, down 2% year-over-year

Outlook & Guidance

Looking ahead, Tomra anticipates a 5% revenue growth in its existing collection markets. However, the recycling segment is expected to face a 15-20% revenue decline in 2025. The food division aims for mid-single-digit revenue growth, with an EBITDA margin target of 10-11%. InvestingPro’s analysis shows the company maintains a GOOD financial health score of 2.91, with liquid assets exceeding short-term obligations, supporting its investment plans. The company is also investing in adjacent businesses, with operating expenses estimated at €20 million.

Want deeper insights? Access Tomra’s comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, along with 1,400+ other detailed company analyses.

Executive Commentary

Tove Andersen, CEO of Tomra, expressed confidence in the company’s long-term prospects despite current challenges. "The market will come back," she stated, emphasizing the potential for growth in recycled materials driven by regulations. Andersen also highlighted the company’s objective to return to an EBITDA margin above 20% as soon as possible.

Risks and Challenges

• Market Sentiment: Weak sentiment in the recycling market, particularly in Europe and the US, could impact future revenue.
• Macroeconomic Uncertainty: Ongoing economic challenges may affect investment levels and order intake.
• Competitive Landscape: The expansion of deposit return systems in Poland and Portugal presents both opportunities and competitive pressure.
• Cost Management: The company is focusing on cost reduction and product portfolio upgrades to maintain profitability.
• Regulatory Changes: New regulations could influence market dynamics and demand for recycled materials.

Q&A

During the earnings call, analysts inquired about Tomra’s competitive position in Poland’s deposit return scheme and the company’s ability to maintain gross margins. The management expressed confidence in their strategic initiatives and highlighted flexibility in production capacity as a key strength.

Full transcript - Tomra Systems ASA (TOM) Q3 2025:

Daniel Sundahl, Head of Investor Relations, Tomra: Good morning, ladies and gentlemen, and welcome to Tomra’s third quarter results presentation for 2025. My name is Daniel Sundahl, and I’m Head of Investor Relations. As always, CEO Tove Andersen will start today’s presentation by giving you the main highlights of the quarter. Afterwards, CFO Eva Sagemo will dive deeper into the numbers and present our updated outlook. At the end of the presentation, we will open up for Q&A for participants in the Teams webinar. A link to the Teams webinar can be found in this morning’s stock exchange release. We look to conclude this presentation at around 8:45 A.M. today. Without further ado, I give the word to CEO Tove Andersen.

Tove Andersen, CEO, Tomra: Thank you, Daniel, and welcome from me as well to our Q3 presentation. The results in this quarter have been muted due to the phasing of new deposit markets in collection and a continued weak market in recycling. Food, however, is continuing to perform in line with our expectations on both top line and bottom line. In addition, we see a strong momentum in orders in food, which is positioning this division well for future growth. Despite the overall financial results being muted in the quarter, the activity level has been anything but that. We are very excited about the prospects going forward. Let me run through an update on our three divisions and Horizon. As always, I start with collection. In collection in the quarter, we saw a solid growth of 6% in our existing markets.

We are on track on delivering on our strategic ambition, which is to have 5% annual growth in existing markets. In the quarter, 90% of the revenue stems from these markets, which really provides a strong and stable foundation for our collection business. We did have a decline in contribution from new markets in the quarter. Last year, Q3, we had good contributions from Austria, which went live with a deposit scheme early this year. This quarter, we see that the main rollout in new markets like Poland and Portugal is yet to come. What is then the status in these two markets? First of all, Poland reached a significant milestone on October 1. The deposit scheme went live. This was, of course, expected, but it’s always nice to see that this happened without any additional delays.

As we have communicated before, the launch in Poland is what we call a soft launch with a three-month grace period. That means that currently there are very few beverage bottles and cans in the market sold with the deposit label and the deposit value. This also means that during Q4, there will be very few bottles and containers returned to the retailer. This is why many of the retailers have not seen an urgency in investing in infrastructure, reverse vending machines yet. This will change now. As of January 1, all containers put on the market need to have a deposit value. The number of bottles and cans that will be returned to the retail shops will then gradually increase during 2026, and thereby also the demand for automating this collection through reverse vending machines. There are always some customers who want to be early.

We have already more than 1,600 Tomra RVMs in Poland. When we estimate the market potential in Poland, we believe that the initial rollout will be with the large retail chains, and that will take place from now till mid-next year. We expect that market potential to be roughly 10,000 to 12,000 RVMs. In addition to these large retail chains, you have tens of thousands of small retailers and independent stores in Poland. It is very difficult to estimate how many of these will buy an RVM, but they can represent the potential of 5,000 machines or more. We believe what you will see in Poland is a fairly long tail of sales, similar to what we have seen in Romania. We have so far been delivering to three leading retail chains in Poland.

As you probably have picked up in the stock release we sent out yesterday, we have now also signed with Dino. We are very pleased that they have selected us as their provider. In addition to that, we have preferred supplier agreements with a dozen franchise groups of independent retailers. How that works is that these franchise groups will sign a frame agreement, but the decision will be up to the independent retailer if they will buy an RVM and from whom they will purchase from. We are very pleased with the position we have achieved so far in Poland. This position provides a strong foundation going forward, and we are really excited to take part in making this a successful deposit return scheme for our customers, for Poland, and for the environment. Over to Portugal.

There is still no firm go-live date communicated in Portugal, but the expectation is that the deposit scheme will go live late Q1 or early Q2 next year. Compared to Poland, the market is showing more normal market dynamics, and the majority of the market is already signed. We are working with five leading retailers in Portugal, and the rollout is expected to step up now in Q4 and continue the first half of next year. As always, we show on this slide a list of upcoming markets. I will not comment on all of them, but both UK and Spain are of course of particular importance due to their size. In the UK, we already see significant activity by the retailers to prepare themselves for the upcoming deposit scheme, so that is good to see.

Also, it is good to see the positive development in the activity in Wales, which now has drafted their legislation. You might remember that the current planned deposit scheme is covering England, Scotland, and Northern Ireland, not Wales. It’s early days, but of course still uncertain, but Wales could then potentially join the rest of the UK when this will go live late 2027. In Spain, they are running the process to appoint a scheme operator, which is expected to be in place by mid-2026. Also nice to see in Spain that there is some activity on the ground. We participated in a small pilot in Sangüesa, where there have been collected 150,000 bottles during three months in this summer. These pilots are important to engage the community and local authorities to then both get the buy-in, but also preparing them for the upcoming deposit return scheme.

I will end my update on collection with the exciting news about our acquisition of Klink in the US. Klink provides bag drop collection solutions. This means that instead of depositing one-on-one beverage container, you put it in a bag, you deposit the whole bag, and then you will get the deposit back a few days later. This can be an attractive collection method in certain markets, complementing the reverse vending machine and replacing depots and redemption centers. This acquisition will in itself generate significant value as we have large synergies between their operation and our material recovery business in the US. We have indicated that the price that we have paid will then be equal to a 2027 EV/EBITDA multiple below 10.

In addition to being a profitable acquisition in itself, the Klink solution will be a great addition to our portfolio, especially in the US market, where we do see strong growth potential for this type of bag drop solutions. To recycling. Recycling delivered a weak Q3, both on the P&L and on order intake. We see that the depressed market sentiment continues in Europe and the US, both within the plastic and the waste segment. This is driven by lack of profitability of plastics recycling and geopolitical uncertainty. However, there are still regions and segments performing better. We still see good activity in the Middle East, Asia, and Eastern Europe, and in certain segments like the metal segment. However, based on what we see currently, we believe that the weak market sentiment will continue next year and potentially also the following year.

Therefore, we are taking measures to address the current market situation in order to improve the profitability of the division. Our ambition is to get the profitability level in recycling above 20% EBITDA as fast as possible. I want to stress that we are still confident about the positive outlook medium to long term for this division, as legislations such as the EU Packaging and Packaging Waste Regulation and customer commitments to CO2 reduction will drive demand for recycled content. If you only look at Europe, the requirements in the EU Packaging and Packaging Waste Regulation for 2030 mean that at least you need to double, potentially triple, the infrastructure in Europe. The market will come back. We will revert with more details on the planned actions to restore profitability in our Q4 results presentation. To food.

Food is again a highlight in the quarter as they continue to deliver in line with our top-line expectations and profitability ambition. I said it before, but I want to stress it again, that I’m very proud of the whole food organization on how they have turned this business around. Now we see the market and orders are picking up as well. Q3 is typically the quarter with the lowest order intake, but it was up 6% on the same quarter last year, and it leaves us to end the quarter with a record high order backlog of €138 million. Our plan for this year has really been about focusing on profitability at the same time as we position us for growth in 2026, and we are definitely on track for that.

Part of positioning us for future growth has been to upgrade and work on upgrading our product portfolio in selected categories. We need to have the best solutions in the categories we focus on in order to continue profitable growth. In addition to the cost reductions to the turnaround, we have had and invested in focused R&D in parallel. I’m very excited about the launch of our new 4C sorter for nuts and frozen vegetables. Our goal for this solution is that our customers will save time, they will reduce operational cost, and it will really raise the bar for the quality in nuts and frozen vegetable sorting. Our AI solution, Lukai, is integrated into the 4C sorter. This brings deep learning to the nut industry, and here we are building on the successful Lukai applications we already have launched for apples, blueberries, cherries, and citrus.

This is the first bulk sorter to run the entire spectrum of artificial intelligence in tandem, allowing the customers to have power to instantly adapt to changing conditions. What really sets this product apart is the ability it has to achieve a false reject rate of less than 1%. What does that mean? It means that you have a very low volume of good quality produce that is being rejected. This ensures that the processors can maintain a really high product quality without sacrificing yield, which equals profit. It’s very interesting to follow now the development of sales of this product. Let me conclude my part with providing an update on the Horizon, our portfolio of adjacent business building activities, which today consist of our two organic ventures, Tomra Feedstock and Tomra Reuse, and our acquisition last year, SeedTrace.

The whole portfolio is progressing very well and delivering on their plans. In SeedTrace, we see strong momentum and they are delivering both top line and profitability in line with our expectations when we did the acquisition. In Reuse, there are lots of exciting developments. If you remember, here we are focusing both on a city solution and an event solution for takeaway packaging to replace single-use packaging with reusable ones. For the event solution, we had a successful pilot at the music festival Oya in Norway this summer, and more pilots will be run during this autumn. In the city solution, we have, of course, the Ourus pilot up and running and are now commencing installations in Lisboa in Portugal. Over to Tomra Feedstock, which is in a very exciting period as the Ombro plant is now up and running.

This is a feedstock sorting plant in Norway, which is designed to take all plastic packaging waste in Norway and turn it into valuable raw materials. The plant is a joint venture between us and the producer organization Plasteratur. The construction project has been on time and on budget, and in addition, the quality of the output has also been in line or even a bit better than our expectation. It’s been a fantastic job by both the Feedstock team and our Tomra Recycling team to achieve this, and also our external partners, including Sutco, which has been the plant builder. We are currently now producing 10 high-quality output fractions from mixed plastic waste. On capacity, we will now, in the beginning, have a utilization rate of one-third of the capacity with a plan to increase it to two-thirds during next year.

As previously communicated, we are expecting a positive EBITDA, just to make sure we have the D in there, run rate end of this year, and a neutral and positive EBITDA contribution in 2026, given successful capacity ramp-up and current market prices. With that, I end my update and will hand over to Eva on the financials and outlook. Thank you, Tove. Let’s start with the group P&L in the quarter. The third quarter came in at €306 million, down 6% compared to Q3 last year. As timing of revenues from new markets has been uncertain, collection ended 5% down compared to Q3 last year. Recycling was down 32% due to the weak market sentiment, and food down 2%, however strong delivering on the estimated conversion ratio. Gross margins in the quarter ended at 44%, up from Q3 last year, which were at 43%.

Strong cost control across divisions with OpEx of €104 million in the quarter, up compared to Q3 last year, where most of the increase is explained by SeedTrace feedstock activity and acquisition cost from Klink, as well as inflation. This results in an EBITDA of €30 million in the quarter and an EBITDA margin of 10%. Looking into collection, revenues came in at €179 million, down 5% compared to a strong third quarter last year. Last year, we had strong sales in Europe, with Austria preparing for their deposit return scheme launch, while this quarter sales are yet to pick up from the new markets, then being Poland and Portugal this year. Existing markets are trailing well in line with our expectations of 5% growth year over year, currently 6% in the quarter and 6% also year to date.

We continue to see strong gross margins in collection, ending the quarter at 42% compared to then 41% last year. Gross margins in the quarter are positively impacted by the business mix. We have good cost control in collection with OpEx of €47 million, up compared to last year, but flat, adjusting for the acquisition cost of Klink. EBITDA ended at €29 million, resulting in an EBITDA margin of 16%. Looking into recycling, recycling came in weak in the quarter at €40 million, down compared to Q3 last year and €3 million lower than the estimated conversion ratio that we gave back in Q2. As you can see from the overview, the weak performance is in our biggest markets, Europe and North America, and that is explained by the weaker market sentiment, especially in the European plastic recycling segment, but also in the waste sorting segment in North America.

Gross margins ending at 44%, weak compared to Q3 last year, where we had higher volumes as well as favorable product and business mix. As we have seen this year, also relevant for this quarter, we have a higher share of metal projects recognized in the P&L, which then impacts the margin negatively. The underlying product margins are still intact for recycling. We have good cost control in recycling, OpEx now of €21 million, slightly up from Q3 last year, mainly explained by inflation. That results in a negative EBITDA in the quarter of €3 million. Looking at P&L, that also came in weak in the quarter due to the challenging market situation. Order intake was then down 30% compared to Q3 last year, ending at €42 million. That also results in a declining order backlog in the quarter of 19%, ending then at €109 million.

When we look at the trailing 12 months for order intake, we are down 17%. For food, food came in strong at €76 million in the quarter, down 2% compared to Q3 last year, but higher than the estimated conversion ratio for the quarter. Revenues were relatively stable in the different regions, as you can see from the overview. Gross margins ending at 45%, up compared to Q3 last year, explained mainly by positive product mix and cost savings that have been realized. Tariff cost has been €1 million in the quarter, but that has been fully mitigated. When we look at OpEx in food, we ended at €26 million, down from Q3 last year, then driven mainly by the cost savings, resulting in an EBITDA margin of 10% in line with the overall target for the year.

Looking at order intake in food, we had a strong order intake of €77 million, up 6% compared to Q3 last year. All regions are performing well, with strong sales in citrus and also continued solid performance in potatoes, those being the two largest categories in food currently. The strong order intake results also in the strongest order backlog recorded, ending at €138 million, then up 21% compared to Q3 last year. Also here, looking at the trailing 12 months for order intake, we are up 8%. Yeah, we are still in a healthy position looking at the balance sheet, and cash flow from operations came in at €64 million in the quarter compared to €99 million in Q3 last year.

When we look at cash flow from operations year to date, we are more or less in line with last year, ending at €147 million year to date this year. Equity ratio of 33% in the quarter and a gearing of 2.2 times. The gearing is up in the quarter, mainly related to the acquisition of Klink. That also goes into the explanation of the ROKI trailing a bit down compared to Q2. That’s based on lower profitability, but also the higher goodwill that we have in our balance sheet. Looking at the financial position ending in Q3, we had a €40 million bridge loan to fund the acquisition of Klink now in Q3, and our current weighted average debt maturity is at 3.7 years.

Important to mention is that all of our bonds are green, and we also just recently launched our new green financing framework, replacing our green bond framework that was launched in 2022. Over to the outlook, and we start with collection. There is a high activity related to deposit return systems in new markets, as well as growth in existing markets. In short, the midterm performance will depend on the timing of new markets, but also replacement sales, introduction of new innovation, and variation of product and business mix. The revenue growth in existing markets for 2025 is estimated at approximately 5%, and we are trailing well on that one currently. The overall revenue growth for collection in 2025 is dependent on the rollout in new markets, being Poland and Portugal this year.

Having already secured contracts in both countries, in combination with Poland being live since 1st of October this year, we expect rollout activity to ramp up now in Q4. For the contracts signed in Poland, the rollout is expected until the first half of 2026, but it is challenging to estimate how much of that will be recognized as revenue in Q4. This depends on whether the customers are ready, as they are responsible for preparing installation sites. On our hand, we are fully prepared and ready to start. Gross margins should continue to stay above 40%, and we also expect good cost control to continue. However, we might experience quarterly variations in the OpEx, depending on investments into new markets. Related to that, we have a ramp-up OpEx run rate for new markets, which has an estimated level of €20 million for the full year.

Looking at recycling, as Tove said, while long-term drivers such as regulation and the demand for recycled materials remain solid and are expected to create growth opportunities, the market is currently facing significant challenges. Ongoing trade tensions and a subdued European plastic recycling market, in addition to considerable macroeconomic uncertainty, have impacted the market sentiment negatively. That makes the timing of orders less predictable for us. This market environment is expected to continue throughout 2026 and potentially into 2027. More short term, based on the order backlog at the end of this quarter, a 70% conversion ratio is estimated to be recognized as revenues in the fourth quarter. With this conversion rate, revenues for 2025 are estimated to decline approximately 15% to 20% for recycling. It is important to note, with the market uncertainty, there is a risk that orders may be postponed over quarters.

As we know, volumes and product mix impact the gross margin in recycling. This year, we have had a higher share of metal orders being delivered, impacting the overall margin negatively. Looking at Q4, we have a more balanced mix of waste and metal orders being delivered, meaning we estimate some improvements in the gross margin for Q4. Tove touched upon that measures to restore our profitability have started in recycling. We are going to give further updates in Q4. Our objective is to come back to an EBITDA margin above 20% as soon as possible. The outlook for food, the need for optimization, along with the increased quality and safety requirements for food production, continue to serve as drivers for growth and opportunities in food. While the market now is normalizing, ongoing macroeconomic uncertainty may still influence customers’ willingness to invest.

Based on the order backlog ending in the third quarter, a 60% conversion ratio is estimated to be recognized as revenue in Q4. With this conversion rate, revenue growth for 2025 is estimated at mid-single digits. However, also here, given the market uncertainty, orders may be postponed over quarters. The cost reduction program has improved our gross margins in food. However, we will continue to see quarterly variations in the gross margins, dependent then on volume and product mix. We have talked about tariffs impacting margins negatively in Tomra, and especially for the food division. However, due to mitigating actions, we do not estimate material negative impact in the gross margins for food in Q4. Following last year’s cost reduction program, the target is to achieve an EBITDA margin of 10% to 11% in 2025.

Lastly, the outlook for Horizon, which then consists of feedstock and reuse and SeedTrace, while the underlying OpEx for feedstock and reuse are expected to remain in line with the 2024 levels, around €8 million, there will be an increase in costs related to the Ombro feedstock plant now being in production. That gives us a total OpEx run rate for feedstock and reuse estimated south of €20 million for full year 2025. CapEx related to Horizon is estimated currently at €30 million for 2025, which is then primarily related to our feedstock plants, where we currently have spent €20 million. That’s Daniel and my presentation.

Daniel Sundahl, Head of Investor Relations, Tomra: Thank you, Eva, and thank you, Tove. We will now move over to the Q&A. To ask a question, please raise your hand in the Teams webinar. I see that we have a few questions coming in already. The first one is coming from Elliott Geoffrey Peter Jones at Danske Bank A/S. Please go ahead, Elliott.

Morning, guys. Thank you for taking my question. Just on the collection side, obviously there’s been a lot of recent news with orders being announced for you guys and some of your competitors as well. I just wanted to get your take on the developments in the space here and what could come with the increased competition. With this competition, are you starting to see increased pressure for potentially lowering prices, for example? I mean, you’ve always been quite confident that you can keep gross margins at a certain level in collection. I’m just wondering if you’re seeing perhaps a shift in customer behavior to kind of just go cheaper and tick a box, which could percolate down into other markets, or are you just not seeing that?

Tove Andersen, CEO, Tomra: Yeah, the situation in Poland, we are always expecting in these new markets that it will be very competitive. Because as you know, when a new market is launching, more or less the whole market is up for grab. Everybody wants to take their share. It is important to get a significant share from day one because that will give you scale advantages, advantages on efficiency, and it gives you a good position to harvest for the coming years. The way we work in Tomra to make sure that we win a significant part of the market, we work on really making sure we have a good product portfolio that fits the customer needs. Why do customers choose us? It is because we have a portfolio that fits their needs, that we provide reliability and uptime, but also a great service network.

I talked a bit about the developments so far, and as I said, we are satisfied with the position that we have gotten so far, but it’s definitely very competitive. Our gross margin target in collection is not changed. Our gross margin target is that we should be above 40% as an average. There will always be certain markets, certain products that will be above, and some that are below.

Got it, thanks. One more, you mentioned the service side of things there, and also I’m just thinking that the production capacity side of things. Can you provide some insight into the production capacity you have of reverse vending machines each year, or even kind of just like qualitatively, if you think that is something that you have by far the highest of amongst your competitors, or are you seeing others kind of catching up?

That’s also what we are seeing as one of our competitive advantages in Poland, that we have been ready to deliver early and guarantee, you know, certain volumes in a short time period. We have quite a flexible production setup. We have some in-house production, and main production is outsourced. As Eva commented in her outlook, going forward, we are now ready to start really delivering on the orders that we have in Poland. It will not be our production capacity that will be the limiting factor, but many of the Polish retailers will not have the reverse vending machines inside their store. They will put it outside. This means that also the retailers need to prepare the site where the machine is going to be installed.

Our uncertainty on timing on deliveries for Q4 and first half of next year is really linked to that, not our ability to produce and install.

Got it. Thank you very much.

Daniel Sundahl, Head of Investor Relations, Tomra: Thank you, Elliott. The next question is coming from Fabian Jorgensen at Pareto. Please go ahead, Fabian.

Thank you. I’ll start off with three quick ones, starting by following up on Elliott’s question there. If we say a market of 20,000 machines in Poland, roughly 50% of the market has already been handed out now. If we assume that you take the Germans and you had 3,000 yesterday, you’re at roughly 22% market share. Now you go into more of, let’s say, the long tail where there’s a preferred supplier agreement, but every retailer will decide themselves. You have a 50% market share target. Do you see any risk to that in Poland? If you also state that it’s important to get a big footprint in the start to get scale on service and everything, will you prioritize scale over price to get the 50%? What’s more important, margins or market share?

Tove Andersen, CEO, Tomra: Yeah, it’s a good question. Of course, it’s difficult to answer yes or no, because it is a balance here. It’s important, as I said, to get a large enough position in the market. We are very committed to the profitability targets that we have set for collection on 40% gross margin and an EBITDA of high double teens. It’s really about a balance. As I said, we have a portfolio. We have, for example, developed the S2, which we communicated is what Dino has ordered. The S2 has been designed for the Polish market. It is a standalone outside machine with galvanized steel, so you can really take both the heat and the cold and the rain and everything and snow in Poland. By having then also a unique product, it’s easier to maintain margin versus if you’re competing head-to-head.

The feedback that we have gotten from the Polish customers, which typically have been now testing many of the suppliers for the last couple of years, is that they really appreciate our solutions. That’s also one of the reasons why we are so firm still that, on average, we will meet our targets on profitability in collection.

Okay, and then following up on perhaps something a bit more positive, your food margins are very strong. Year-to-date, you’re 13%. You set your target still to 10%, 11%. Growth is coming back. Margin scales with volumes. Why don’t you raise that target?

Yeah, the target is 10% to 11%. As you pointed out, we are year-to-date at 13%, so we are trailing in a good position to reach the targets, Fabian.

Okay, finally on recycling, you say that you expect weaker markets in 2026 and perhaps also in 2027. Of course, going into 2025, you had quite a strong backlog. Are we speaking in terms of orders or are we speaking in terms of P&L? Meaning that, if orders stay muted, that would imply negative growth in 2026, not stable and continued muted markets, if you understand my question.

Yeah, no, I understand your question. The current sentiment is challenging, right? We see that for 2025, and we expect that challenging market situation to continue into 2026, as we said, and potentially into 2027. Of course, everything is dependent on the order intake, right? We will need to come back to that on how that will trail in the coming quarters. We can’t say more than that. We need to look into the coming quarters to see how 2026 will develop.

Got it, thanks.

Daniel Sundahl, Head of Investor Relations, Tomra: Thank you, Fabian. The next question is going to come from Adela Abdenian Dashian at Jefferies LLC. Please go ahead.

Thank you, Daniel. Two questions from me. First of all, on the OpEx space, I’m assuming that you definitely do have an ambition to double the number of RVMs from current levels in just the Polish market. I appreciate the commentary around what you expect the ramp-up cost to be for this year. How should the phasing look like going into 2026? It’s a bit too early, I guess, but should we expect a similar type of pace or with what you have already expanded into that market? Do you feel like it’s enough in the preparation phase?

Tove Andersen, CEO, Tomra: As I said on the outlook, we might have variations in the OpEx in Collection based on investments into new markets. Of course, now being Poland and Portugal, and then the markets to come in 2026 and beyond. We have already a good organization on the ground in Poland, but of course, some more fine-tuning of that will be needed going forward in order to be delivering on what we should in relation to the contracts. More precise than that, we can’t be.

Thank you. On recycling, how confident are you in your ability to at this point reach a level of a 70% conversion ratio given that the current market sentiment continues to be weak? Is this really realistic or do you have any concrete examples of why you have this confidence?

What we do normally in a quarter is to give that conversion ratio, which is an estimate based on the order backlog that we have at the current point in time on the expectations to be delivered into Q4. That’s the best data point that we have. We also have this disclaimer that orders can be postponed over quarters, which we have also seen in the recent quarters for recycling. 70% is the best data point that we can give at the current point in time, Adela.

Do you base this on historical performance, or is it like actual conversations with customers and planned deliveries?

This is based both on the order backlog information and when the orders are going to be shipped and delivered based on customer dialogue that we have. It is based on data points in combination with when you sign the order, when you have the discussions with the customer throughout the period until delivery. It is a data point that we have currently today based on customer information.

Thank you.

Daniel Sundahl, Head of Investor Relations, Tomra: Thank you, Adela. The next question will come from Daniel Sundahl at ABG. Please go ahead, Daniel.

Yes, hello. Hello everybody. Thank you for taking my question. I have two questions. The first one is, I think on a previous quarter you said you’ve installed around 1,000 reverse vending machines in Poland. Is it possible to give an update on how much you’ve installed up until now as of Q3? My second question is that now that we’ve seen the two large retailers place big orders in the last week, do you expect the remaining large ones? I think there’s at least one more to place orders in the coming month. Do you have kind of a threshold for contract announcements like yesterday? Does it need to be, let’s say, over 2,000 machines for you to announce it? That’s my two questions. Thank you.

Tove Andersen, CEO, Tomra: Eva can answer the last question. I can start with the first one. We have currently more than 1,600 reverse vending machines installed in Poland. That is what we have done so far. On the commercial side, as I said, there will be an initial rollout phase, which is really linked to the leading and the international retailers, where you have seen quite some announcements the last days that they are now firming up on the contracts and the orders. We expect that to be kind of closed in not too long time for the leading retailers. You have the whole chain of independent stores where there will be more frame agreements. Also, what I said is that we have Dino that was announced yesterday and three other of these leading retailers signed up with us. You can say a bit on how we think about announcing contracts externally.

When it comes to the size of contracts, it needs to be significant for Tomra. We are talking more than 1,500 machines, up to 2,000 before that kicks in on an announcement for us. It needs to be significant for us in order to announce. That is also what you have seen in line with previous announcement coming from Tomra.

Okay, thank you.

Daniel Sundahl, Head of Investor Relations, Tomra: Thank you, Daniel. We have one last question coming in from Palav Mithal at Barclays Bank PLC. Please go ahead, Palav. We don’t hear you, Palav. I think you might be muted. At least we can’t hear you. If we don’t get the sound to work, please feel free to come back to us with your question. We’ll be happy to answer it after the presentation. With that, I think we will just conclude the presentation. Thank you, everyone, for tuning in today. The next time we will be standing here is on the 13th of February next year for our fourth quarter results. Thank you very much. Have a nice day. Goodbye.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.