Slide 1: Investor Presentation TOMRA Systems ASA
INVESTOR PRESENTATION TOMRA SYSTEMS ASA 20.02.2020 © TOMRA
Slide 2: Highest level of consumption our planet has ever seen
We live in an age with the highest level of consumption our planet has ever seen 2
Slide 3: Using more resources than ever before
Using more resources than ever before. More than our planet can continue to sustain. 3
Slide 4: TOMRA is well-positioned towards megatrends
TOMRA is well-positioned towards megatrends 1 Solutions for optimal resource productivity 2 Leading market position – fit for growth Circular Economy Future of Food Collection Recycling Solutions Sorting Mining Food Sorting #1 Sorting #1 #1 #1 3 Pioneer in application of sensor-based technology 4 St
Slide 5: Did you know?
DID YOU KNOW? • By 2025 solid waste generation will increase by 70% compared to 2010 levels • 32% of all plastic packaging made ends up in nature every year • 20% of plastic packaging could be profitably re-used and 50% could be profitably recycled if designed for after use systems • Continuing curr
Slide 6: Only 2% of plastic packaging is reused for same products
Only 2% of the planet’s annual plastic packaging production is reused for the same/similar products
Slide 7: Significant untapped potential to reuse good materials
Significant untapped potential to reuse good materials PLASTIC STEEL PAPER PACKAGING ~14% ~70-90% ~50-60% RECYCLED RECYCLED RECYCLED TODAY¹ TODAY¹ TODAY¹ VALUE VALUE VALUE PROPOSITION* PROPOSITION* PROPOSITION* $ 50–80 BN $ 70–150 BN $ 30–40 BN Total volume of plastic packaging is 78 mln tonne annua
Slide 8: Circular economy – redefining value creation
Circular economy – redefining value creation CLEAN LOOP RECYCLING Business case for plastics CLOSED LOOP RECYCLING Value increase 2.5-7x Data driven Data on collection volumes and legal oversight recycling €1400 per ton Production Clear PP/PE TOMRA COLLECTION €1000 per ton SOLUTIONS Clear PET Distri
Slide 9: Did you know?
DID YOU KNOW? • By 2050, a global population of 9.8 billion will require 70% more food than is consumed today • We are currently wasting 33% of global food production • The food industry accounts for around 10% of global GDP • Agriculture accounts for 20% of global greenhouse gas emissions Sources:
Slide 10: New ways of feeding a fast-growing demanding population
New ways of feeding a fast-growing DEMANDING population… To ensure an efficient food production there is an increased need to… …AUTOMATE… Increase Reduce Protect brand value Yield waste Enhance food quality and safety …MONITOR… Meet …AND INNOVATE consumer demands …throughout the value chain By 2030,
Slide 11: TOMRA to play a difference in the future of food production
TOMRA to play a difference in the FUTURE OF FOOD production Processed HARVESTING PROCESSING Retail FMCG AT SOURCE PACKING REPACK Fresh eCommerce GRADE STORE DATA GENERATED THROUGH THE VALUE CHAIN SERVE MULTIPLE PURPOSES Determine taste, Ripeness Traceability Improved Farming Reduce food waste & Defe
Slide 12: Some of the biggest global challenges are TOMRA's business opportunities
Some of the biggest global challenges are TOMRA’s business opportunities 12
Slide 13: TOMRA solutions impact: CO2, containers, potatoes, metals
• Our solutions, in use around the globe, helped keep ~17 millions of tons of CO₂ from being released into the atmosphere in 2019 • More than 40 bn used beverage containers are captured every year through our reverse vending machines • Our steam peelers process ~15 million tons of potatoes per year
Slide 14: Company vision: Leading the Resource Revolution
At TOMRA, our company vision is Leading the Resource Revolution It is our belief that businesses have the power, responsibility, and vested interest to help manage our planet’s precious resources—today and tomorrow. 14
Slide 15: TOMRA at a glance
TOMRA AT A GLANCE 15
Slide 16: TOMRA at a glance
4500+ EMPLOYEES Publicly listed on Oslo Stock Exchange (OSEBX: TOM) 9.3 BILLION NOK GLOBALLY REVENUES IN 2019 FOOD RECYCLING MINING REVERSE VENDING MATERIAL RECOVERY 16
Slide 17: Creating value through two strong business areas
Creating value through two strong business areas 2019 Revenue 2019 EBITA 100% 100% • High growth 80% • High margins 80% 50% • Medium cyclicality 45% 60% 60% Technology leadership - sustainable business 40% 40% • Stable 50% • High margins 55% 20% • Low cyclicality 20% 0% 0% Collection Sorting Collect
Slide 18: The TOMRA transformation journey
The TOMRA transformation journey 2011 2012 2008 Sale of Californian material handling TOMRA acquires BEST, leading 2016 business. With the divestment the US food sorting machine producer. Through its transformation TOMRA acquires With the acquisition of BEST, journey TOMRA has moved operation became
Slide 19: TOMRA's two business areas
TOMRA’s two business areas FOOD REVERSE VENDING Share of ‘19 sales ~32% ~39% Employees 1,445 1,905 Customers Food growers, packers and processors Grocery retailers Market share Bulk: ~25% Lane: ~25% Over 70% RECYCLING MATERIAL RECOVERY Share of ‘19 sales ~16% ~11% Employees 260 590 Customers Materia
Slide 20: Installed base worldwide
Installed base worldwide REVERSE VENDING RECYCLING MINING FOOD BULK FOOD LANE Nordic ~15,100 EMEA ~4,500 Europe ~20 EMEA ~3,400 EMEA ~1,580 Germany ~29,500 Americas ~990 US / Canada ~46 Americas ~3,025 Americas ~1,220 Other Europe ~15,000 Asia ~940 Australia ~10 APAC ~780 APAC ~950 North America ~16
Slide 21: Strengthen presence in China
Strengthen presence in China Established in China since 2010 3 business streams active in China 2 wholly own subsidiary 2 joint ventures 3 test centers Beijing: 2 assembly workshop - Joint venture 300 employees Qingdao: - Service hub Kunshan: - Sorter production - Test center - R&D center - Supply h
Slide 22: TOMRA Collection Solutions
TOMRA COLLECTION SOLUTIONS 22
Slide 23: Did you know?
DID YOU KNOW? • 1 million plastic bottles are bought around the world every minute • Less than half of all purchased plastic bottles are collected for recycling • More than 40bn beverage containers are captured by TOMRA every year… • …representing only less than 3% of all beverage containers sold in
Slide 24: The tides are shifting
But the tides are shifting. There’s a desire for change… Consumer demand Legislative push for Market pull from large for responsible new plastic waste brand owners and beverage plastic use options strategies companies 24
Slide 25: An overview of current deposit markets
An overview of current deposit markets* Northwest Territories (2005) Quebec Sweden (1984) Norway (1984) Yukon (1992) (1999) Finland Iceland (1996) (1989) Newfoundland Ontario (1997) Denmark Estonia (2007) (2002) (2005) British Columbia (1970) Prince Edwardian Lithuania Netherlands (2016) Island (200
Slide 26: Upcoming deposit markets on the move
Upcoming deposit markets on the move Scotland: Recently approved Commitment to a Container In progress Deposit Scheme announced in party program North America: Possible expansion of existing deposit England: systems Announced plans for a deposit scheme to reduce plastic pollution. Ongoing consultati
Slide 27: EU enforcing its leadership role on environment
EU enforcing its leadership role on environment Targeting the most littered plastic items Some products to be banned, others less used Separate measures for plastic drinks bottles Collection target for plastic bottles: - 77% by 2025 - 90% by 2029 Extended producer responsibility Recycled content in
Slide 28: A proven solution to achieve high return rates
A proven solution to achieve high return rates • Return rate and deposit value* for various container deposit schemes Return rate Deposit value in EUR Return rates in Lithuania 98% 95% 92% 92% 92% 92% Prior to 34% container deposit 66% scheme No deposit No deposit 43% ~40% End of 0.21- 74% year 1 0.
Slide 29: Designing a deposit scheme – lengthy process from idea to law
Designing a deposit scheme – lengthy process from idea to law Many stakeholders around the table Illustrative legislation process Commitment from Consultation Draft period regulation Final regulation government NGOs Beverage industry Year 0 Year x Central government Technology providers Many questio
Slide 30: Elements of a modern reverse vending system
Elements of a modern reverse vending system User communication Recognition system Sorting & processing Data administration 30
Slide 31: Key market and consumer trends drive structural changes
Key market and consumer trends drive structural changes… CONSUMER TRENDS RETAILER TRENDS MATERIAL TRENDS STAKEHOLDER TRENDS Bag drop solutions, reverse Bigger chains but smaller Biodegradable Beverage producers more logistics from e-commerce stores, self-service bottles proactive to set the scene So
Slide 32: Shifting business models and stakeholders
…reflected in shifting business models and stakeholders Financing Retail Sales & Service model Throughput model High recurring Upfront revenue Revenue Profitable Location service concept Swift roll-out Proven track record Aligned interests Retailer purchases and takes the TOMRA owns and operates the
Slide 33: Main differences between the two business models
Main differences between the two business models Illustrative cash flow profiles per machine ▪ Typically fewer Cash flow machines per capita in Higher initial sales throughput markets ▪ Higher CAPEX needs in Higher recurring a throughput model but revenue normally also higher NPV Year 0 ▪ Uncertaint
Slide 34: Undisputed market leader within reverse vending technology
Undisputed market leader within reverse vending technology >80,000 10,000- 80,000 # of installed RVMs 5,000- 10,000 500- 5,000 <500 Annual revenue from RVM sales 1-10 11-20 21-30 31-40 >40 Number of RVM markets Source: TOMRA estimates and analysis
Slide 35: Moving from RVM provider to clean loop recycling frontrunner
Moving from a reverse vending machine provider to a global frontrunner within clean loop recycling Today Future Business partner supporting customers’ Reverse Vending Profitable core processes Machine and clean loop service supplier recycling Market / Technology Industry Market driven innovator know
Slide 36: Key strengths
KEY STRENGHTS Strong competitive advantages and growth focus Product and People Production Strong Efficient Financial strength to service to support the capacity and brand new market support throughput leadership growth supply chain awareness entry business models PLAYING FIELD BASE MARKETS GEOGRAPH
Slide 37: Flexibility and scalability to enable new business models
Flexibility and scalability to enable new business models and new market entry Redemption centers, small depots etc. Large depots, counting centers PRICE Discounters/Supermarkets Small stores 0.1 -0.3 M UBC/year 0.3 -1 M UBC/year 1-3 M UBC/year 3-5 M UBC/year 5 -15 M UBC/year 15 -50 M UBC/year CONTA
Slide 38: Superior digital platform IoT platform
Strengthen our customers’ competitive edge with our superior digital platform TOMRA Productivity Gain Consumer Engagement API/Data System Integration IOT PLATFORM Retail Productivity Gain 38
Slide 39: Engage consumers to drive volume in throughput markets
Engage consumers to drive volume in throughput markets Deliver a convenient and engaging recycling experience for consumers that increase the participation and drive volume through our installations. Partner with Facilitate and relevant players educate Modernize and enhance the consumer journey Shar
Slide 40: A dynamic organization catered for growth
A dynamic organization catered for growth Products and Machine Holistic FROM centric TO services solution partner Basic People People FROM activities TO development Production Supplemented Scalable with FROM TO and supply chain by third parties third parties B2B B2H TOMRA Brand FROM RVM Supplier TO
Slide 41: TOMRA Sorting Solutions
tie TOMRA SORTING SOLUTIONS F- 7 g — we :
Slide 42: Strong revenue growth since inception in 1996
Strong revenue growth since inception in 1996 Revenue development and key milestones BBC MNOK acquired Compac acquired 4,713 • Total revenue growth (organic plus inorganic) CAGR of ~28% per year from 2004-2019 Odenberg — Average annual organic growth acquired for the same period was ~16% BEST acquir
Slide 43: How does sensor-based separation work?
How does sensor-based separation work? Feeding of High-tech sensors to identify objects unsorted material Precise ejection by ultra fast air jets Product specific equipment design often including multiple technologies to maximize sorting efficiency High-speed processing of information (material, sha
Slide 44: A common sensor-based technology portfolio
A common sensor-based technology portfolio RECYCLING MINING FOOD ELECTROMAGNETIC SENSOR (EM) Electro-magnetic properties like conductivity and permeability X X X LED SPECTOMETRY (LED) Color and spectral properties based on multiple LED light X X X EM sources in very high optical resolution LED NEAR-
Slide 45: Our products are detecting a wide range of parameters
Our products are detecting a wide range of parameters Color Shape & Size Removal of discolorations in mono- Sort on length, width, diameter, area, and mixed-color material broken-piece recognition, … Blemishes Biometric Characteristics Objects with spots or other (small) Sort based on water content
Slide 46: Adoption of sensor-based sorting at different maturity levels
Adoption of sensor-based sorting at different maturity levels Maturity/ industry adoption FOOD RECYCLING MINING* Time * In certain mining sub-segments, such as industrial minerals and diamonds, sensor-based sorting is a more mature technology 46
Slide 47: Examples of cross utilization of sensor technologies
Examples of cross utilization of our sensor technologies TITECH NIR + ODENBERG BEST LASER + TOMRA TITECH NIR + BEST LASER platform mining platform Field Potato Sorter PRO Laser Duo Nimbus BSI • The NIR technology allows • The LASER technology • An NIR sensor has been added efficient removal of rocks
Slide 48: Entering new markets through mid-market strategy
Entering new markets through Mid-market strategy Creating competitive offering to fast growing mid-market High End Market 1 TOMRA firm positioning Mid Market 2 Enter with new Food channel sorter products Low End Market 3 Not to play Recycling Flake Sorter 48
Slide 49: Development in order intake and order backlog
Development in order intake and order backlog Order intake Order backlog Revenues • TOMRA Sorting Solutions (TSS): - Revenues of 1,304 MNOK, down from 1,326 MNOK last year - All time high order intake of 1,332 MNOK in the quarter, compared to 1,146 MNOK last year - Order backlog of 1,458 MNOK at the
Slide 50: Food for thought
FOOD FOR THOUGHT • By 2050 we will be close to 10bn people • We will need more food in the next 40 years than all the harvests in history combined • But farmland is constant – at best • The food you eat will have travelled more than you have Sources: WEF 50
Slide 51: Automation continues on a strong growth trajectory
Automation continues on a strong growth trajectory Robotics become cheaper, more Ensure advanced and quality and user-friendly safety From… To… Improve efficiency Higher labor cost and labor shortages Leverage data insight 51
Slide 52: Market growth expectations – food
Market growth expectations – food MARKET DEFINITION FOOD Sensor-based sorting and grading equipment CAGR 6-8% • Including color sorting • Excluding peripheral equipment and turn-key solutions Fresh and processed segment AFFECTING FACTORS Weather Raw material pricing conditions Manual labor availabil
Slide 53: Three ways of sorting within the Food segment
Three ways of sorting within the Food segment Chute or Channel sorter Free fall (Channel / Chute) Application Seeds, rice, grains Sensor tech. Camera (simple) Revenue share* Approx. 60% Lane grading Belt Application Prepared /preserved Belt inspection veg. and fruit Sensor tech. Several (complex) Re
Slide 54: TOMRA has established the broadest footprint within food sorting
TOMRA has established the broadest footprint within food sorting Free fall Belt Lane SK NDF PFV Fresh Rice, Seeds & Nuts & Processed Fruits, Fruit, Vegetables Kernels Dried Fruit Veg & Potatoes & Potatoes CHANNEL CHUTE BELT AIR LANE/MULTI-DROP SINGULATED SORTING BULK SORTING *Approximately 5% of ann
Slide 55: Food competitive landscape
Food competitive landscape Freefall >3,000 Belt TOMRA competitive positioning # of installed machines • Size (revenues) • Widest range of applications 1,000- (150+) 3,000 • Broadest technology base • Geographic reach (~80 countries) 0-1,000 10-25 markets 25-50 markets >50 markets Lane Revenue from s
Slide 56: Food: applications and sensor technology
Food: applications and sensor technology POTATOES VEGETABLES NUTS DRIED FRUIT SEEDS & GRAINS Chips, French fries, peeled, Beans, beets, broccoli, carrots, Almonds, cashews, hazelnuts, Apricots, cranberries, dates, Barley, coffee, corn, dry specialty products, sweet corn, cucumbers, industrial macada
Slide 57: Creating value in various parts of the food process
Creating value in various parts of the food process 57
Slide 58: Our food sorting customers
Our food sorting customers 58
Slide 59: New sensor technologies will unlock new opportunities
New sensor technologies will unlock new opportunities… • From measuring visual appearance... … to measuring Internal defects Taste Shelf life / Freshness Food hazards 59
Slide 60: Resources are finite
RESOURCES ARE FINITE • Today: we are paying to get rid of our waste through landfill fees and incineration • We are wasting perfectly good materials that can be reused • Tomorrow: The Circular Economy is a driver for change • Creating value out of waste • That is what the Circular Economy is all abo
Slide 61: The circular economy drives a legislative push
The circular economy drives a legislative push… Continued ambitious EU regulations and recycling targets: • From Green Fence to National Sword: Short-term Attract capital and drives investments demand for recycling solutions in waste exporting countries “A common EU target for recycling 70% of packa
Slide 62: 2018 Circular Economy Package promoting recycling
…promoting recycling Description Targets and measures • A common EU target for recycling Waste • Rules on how waste should be managed in the EU. It provides general 60% of municipal waste by 2030 Framework principles for doing so, such as the Waste Hierarchy, Polluter Pays Principle Directive and Ex
Slide 63: …and a market pull
…and a market pull 100% reusable, recyclable or compostable plastic packaging by 2025 Follow their lead Large companies committing to use recycled raw materials = increased demand for recycled offtake Source: Ellen McArthur Foundation @ World Economic Forum 63
Slide 64: Recycling: market growth expectations
Recycling: market growth expectations MARKET DEFINITION RECYLING CAGR 10-12% Sensor-based sorting equipment • Excluding cullet glass sorting • Excluding peripheral equipment and turn-key solutions AFFECTING FACTORS MEUR Tightening regulation Access to capital ~200 ~280 Commodity price Consumer aware
Slide 65: Recycling: competitive landscape
Recycling: competitive landscape >3,000 TOMRA competitive positioning # of installed machines • Largest installed base • Highest revenues 1,000- 3,000 • Broadest technology platform on WR • Highest number of applications and markets served • Leading brand • Market share: 55-60% 0-1,000 10-25 25-50 >
Slide 66: Recycling: applications and sensor technology
Recycling: applications and sensor technology MUNICIPAL SOLID WASTE PACKAGING UPGRADING PLASTICS Hard plastics, plastic film, Plastics, plastic film, PET, PE, PP, flakes mixed paper, RDF, cardboard, mixed paper, metals, deinking paper, metal NIR, VIS, EM organics/biomass NIR, VIS, EM NIR, VIS, XRT,
Slide 67: Automation with TOMRA Sorting units
Automation with TOMRA Sorting units 67
Slide 68: Industrializing the process for recycled plastic
Industrializing the process for recycled plastic Reverse vending Sorting Sorting Washing Extrusion SUCCESS FACTORS NDA NDA • Sufficient demand for WASTE SORTING PLANTS the recycled material WASTE INCINERATION • Output to be of high quality and stable Collection LANDFILL Reprocessing Virgin plastics
Slide 69: Intelligent mine
INTELLIGENT MINE • Mining is an old industry. But chances are that it will it look very different in 10 years time • Energy intensity and water stress are major drivers… • …for disruptive technology forces to reshape the industry • Commodity prices and capex impact the investment sentiment
Slide 70: Mining: market growth expectations
Mining: market growth expectations Total annual market size MARKET DEFINITION MINING Sensor-based sorting equipment CAGR 15% • is still a technology to be accepted • Growth is conditional on new applications and technologies being developed AFFECTING FACTORS MEUR 100 Political climate Access to capi
Slide 71: Mining: applications and sensor technology
Mining: applications and sensor technology INDUSTRIAL MINERALS DIAMONDS FERROUS METALS Phosphate-silica removal, lime- Kimberlite-waste removal, Iron ore grading, hematite pre- stone-silica removal, quartz up- diamond ROM conc., diamonds conc., manganese pre-conc., grade, MgO2-silica removal, final
Slide 72: The concept of sensor-based sorting in mining
The concept of sensor-based sorting in mining Mining process: Mining process: Industrial minerals Metal mining Run of Mine (ROM) Run of Mine (ROM) Primary Crushing Primary Crushing Secondary Crushing Sensor Based Sorting Waste Sensor Based Sorting • 15% to 50% of the ROM Beneficiation Plant: can be
Slide 73: Mining: competitive landscape
Mining: competitive landscape >200 TOMRA competitive positioning # of installed machines • Wide geographical coverage • Broadest technology platform 50-200 • Leading brand • Market share: 40-50% 0-50 10-25 25-50 >50 markets markets markets Revenue from sensor- based sorting Geographic presence Sourc
Slide 74: Historical group financials and targets
HISTORICAL GROUP FINANCIALS AND TARGETS 74
Slide 75: Group financials development – solid track record
Group financials development – solid track record Revenues Gross contribution and margin 10,000 4,500 50% 9,000 4,000 45% 8,000 3,500 40% 7,000 35% 3,000 6,000 30% MNOK MNOK 2,500 5,000 25% 2,000 4,000 20% 1,500 3,000 15% 2,000 1,000 10% 1,000 500 5% 0 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 20
Slide 76: Group financial targets 2018-2023
Group financial targets 2018-2023 – our ambitions affirmed Dividend Revenue payout growth EBITA- Capital margin Structure ROCE new >10% CAGR 40-60% Maintain projects on average of EPS Towards investment >18% grade profile >20% 76
Slide 77: Financial highlights | Balance sheet and cash flow
Financial highlights | Balance sheet and cash flow With IFRS 16 Without IFRS 16 31 Dec 31 Dec 31 Dec Amounts in NOK million 2019 2019 2018 ASSETS 10,868 9,815 9,595 Intangible non-current assets 3,788 3,788 3,821 Tangible non-current assets 2,330 1,293 1,276 Financial non-current assets 406 406 340
Slide 78: Currency risk and hedging policy
Currency risk and hedging policy 10% change in NOK towards other +7.9*% currencies will impact: Positive Revenues Expenses EBITA impact from EUR* 4.5% 4.0% 7.0% +4.7*% stronger USD 3.5% 2.5% 8.0% USD vs EUR OTHER** 2.0% 3.0% -4.0% ALL 10.0% 9.5% 11.0% 4Q18 1Q19 2Q19 3Q19 4Q19 HEDGING POLICY *Average
Slide 79: Collection solutions – segment financials
Collection solutions – segment financials Revenues Gross contribution and margin 5,000 2,000 50% 45% 4,500 1,800 40% 4,000 35% 1,600 3,500 30% MNOK MNOK 1,400 25% 3,000 20% 1,200 2,500 15% 10% 2,000 1,000 5% 1,500 800 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013
Slide 80: Sorting solutions – segment financials
Sorting solutions – segment financials Revenues Gross contribution and margin 5,000 2,500 4,500 60% 4,000 2,000 50% 3,500 3,000 1,500 40% MNOK MNOK 2,500 30% 2,000 1,000 1,500 20% 1,000 500 10% 500 0 0 0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2009 2010 2011 2012 2013 2014 2015 2016
Slide 81: Shareholder structure
Shareholder structure Top 10 shareholders as of 02 January 2020 Shareholders by country 1 Investment AB Latour 39 000 000 26,3 % 2 Folketrygdfondet 11 642 913 5,9 % 13% 3 The Bank of New York Mellon 7 863 046 5,3 % (NOM) 7% 31% 4 Clearstream Banking 5 584 324 4.1 % (NOM) 5 State Street Bank 4 788 32
Slide 82: Copyright and disclaimer
Copyright The material in this Document (which may be a presentation, video, brochure or other material), hereafter called Document , including copy, photographs, drawings and other images, remains the property of TOMRA Systems ASA or third party contributors where appropriate. No part of this Docum