Tomra Systems Asa · OSL:TOM
Tomra Systems Asa — Investor Presentation (October 2021)
82 slides from Tomra Systems Asa's investor presentation, Oct 22, 2021
Slide 1: Investor Presentation
Investor Presentation TOMRA Systems ASA 22.10.2021 © TOMRA
Slide 2: We live in an age with the highest level of consumption
WE LIVE IN AN AGE WITH THE HIGHEST LEVEL OF CONSUMPTION OUR PLANET HAS EVER SEEN, USING MORE RESOURCES THAN EVER BEFORE. MORE THAN OUR PLANET CAN CONTINUE TO SUSTAIN 2
Slide 3: TOMRA is well-positioned towards megatrends
TOMRA is well-positioned towards megatrends 1 Pioneer in sensor-based and digital technologies 2 Leading market position – fit for growth Recycling Collection Food Mining #1 #1 #1 #1 3 Solutions for optimal resource productivity 4 Strong financial performance, people & culture Revenues Circular Econ
Slide 4: 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 5: Only 2% of plastic packaging is reused for the same products
Only 2% of the planet’s annual plastic packaging production is reused for the same/similar products OUR AMBITION: 40% Collected for Recycling 30% Closed Loop Recycling 5
Slide 6: Significant untapped potential in reusing materials
Significant untapped potential in reusing 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 annually
Slide 7: 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 8: 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 9: New ways of feeding a fast-growing demanding population
New ways of feeding a fast-growing DEMANDING population… …AUTOMATE…CONTROL…AND INNOVATE Sources: Brookings 9
Slide 10: TOMRA plays an integral part in the food value chain
TOMRA plays an integral part in the food value chain Farming Harvesting and packing Processing and repacking Distribution and sales Consumption HARVESTING Away- Processed PROCESSING from home AT SOURCE PACKING REPACK Retail Fresh eCommerce GRADE STORE DATA GENERATED THROUGH THE VALUE CHAIN SERVE MUL
Slide 11: 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. 11
Slide 12: TOMRA's sustainability strategy
TOMRA commits to ensure positive sustainability impact both internally and externally TOMRA’S SUSTAINABILITY STRATEGY TOMRA has in 2020 undertaken work to update its sustainability strategy, to prioritize and focus corporate sustainability efforts where they matter most and will have the greatest im
Slide 13: TOMRA at a glance
TOMRA AT A GLANCE 14
Slide 14: TOMRA business areas and key facts
4300+ EMPLOYEES Publicly listed on Oslo Stock Exchange (OSEBX: TOM) 9.9 BILLION NOK GLOBALLY REVENUES IN 2020 TOMRA COLLECTION TOMRA RECYCLING MINING TOMRA FOOD REVERSE VENDING MATERIAL RECOVERY RECYCLING MINING PROCESSED FRESH FOOD FOOD 15
Slide 15: Creating value through three strong business areas
Creating value through three strong business areas 2020 Revenue 2020 EBITA 100 % 100 % • Large sector • Good margins 22% TOMRA FOOD 33% • Low cyclicality 80 % 80 % 23% 60 % 60 % 17% • High growth TOMRA RECYCLING MINING • High margins • Medium cyclicality 40 % 40 % • Stable business 54% 50% 20 % TOMR
Slide 16: 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 17: Strong revenue growth in Recycling, Mining and Food
Strong revenue growth in Recycling, Mining and Food Revenue development and key milestones BBC MNOK acquired 5,005 • Total revenue growth (organic plus inorganic) CAGR of ~27% per year Compac from 2004-2020 acquired — Average annual organic growth Odenberg for the same period was ~15% acquired BEST
Slide 18: TOMRA's three business areas
TOMRA’s three business areas TOMRA COLLECTION TOMRA RECYCLING MINING TOMRA FOOD REVERSE VENDING RECYCLING PROCESSED FOOD Share of ‘20 sales ~40% ~14% ~19% Employees 1,705 487 800 Customers Grocery retailers Material recovery plants, scrap dealers, metal shredder operators Food growers, packers and p
Slide 19: Installed base worldwide
Installed base worldwide TOMRA COLLECTION TOMRA RECYCLING MINING AND FOOD REVERSE VENDING RECYCLING MINING PROCESSED FOOD FRESH FOOD Nordic ~15,200 EMEA ~5,300 EMEA ~31 EMEA ~3,671 EMEA ~1,699 Germany ~29,500 Americas ~1,100 Americas ~46 Americas ~3,144 Americas ~1,413 Other Europe ~13,500 APAC ~1,0
Slide 20: Strengthened presence in China
Strengthened 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 workshops - Joint venture 300 employees Qingdao: - Service hub Kunshan: - Sorter production - Test center - R&D center - Suppl
Slide 21: TOMRA Collection
TOMRA COLLECTION 22
Slide 22: 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 23: The tides are shifting. There is a desire for change
But the tides are shifting. There is 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 24: 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 25: Upcoming deposit markets on the move
Upcoming deposit markets on the move Latvia: Scotland: Deposit Return System to be Container deposit scheme implemented February 2022 planned to start July 2022 Slovakia: England: Deposit Return System to be Connecticut: Consultation ongoing for implemented January 2022 Expansion of existing deposit
Slide 26: Deposit return systems are extremely effective at capturing items
Deposit return systems are extremely effective at capturing items for recycling 1 1 2 Compiled from deposit System Operators and “PET Market in Europe: State of Play,” 1 Aluminum, Glass, Plastic.. “Beverage Market Data Analysis 2017,” Eunomia. 2020. Data available upon request. Container Recycling I
Slide 27: High collection rates achieved in two years' time
High collection rates achieved in two years’ time • Return rate and deposit value* for various container deposit schemes Return rates in Lithuania Return rate Deposit value in EUR 98% 95% 92% 92% 92% 92% Prior to container 34% deposit 66% scheme 43% ~40% End of 74% year 1 0.25 0.25 0.21- 0.31 No dep
Slide 28: The centralized DRS model: How it works
CENTRALIZED, NON-PROFIT ADMINISTRATION AND OPERATIONS The centralized DRS model: How it works The return-to-retail obligation provides a convenient network Consumers are incentivized to of return locations. participate through a meaningful deposit value. Trust is built into the system’s processes th
Slide 29: Reinvestment of unredeemed deposits and material revenue
Reinvestment of Profit and loss overview of Norway’s unredeemed deposits Central System Administrator (2019) and material revenue within the system In Norway over 80% of the system’s costs are covered by unredeemed deposits and material revenue 30
Slide 30: Recycled content requirements complement deposit return systems
Recycled content requirements complement deposit return systems Market values for recycled material Lack of a stable market leads Content requirements raise and are volatile, making investment in to a lack of supply for high-quality stabilize a key funding stream collection/recycling risky recycled
Slide 31: The four principles of high-performing deposit return systems
The four principles of high-performing deposit return systems PERFORMANCE CONVENIENCE PRODUCER RESPONSIBILITY SYSTEM INTEGRITY A collection target for a The redemption system is Producers manage, finance Trust is built into the broad scope of beverage easy, accessible and fair and invest in the syst
Slide 32: Reverse vending technology in a high performing DRS
Reverse vending technology in a high performing DRS User communication Recognition system Sorting & processing Data administration 33
Slide 33: Business model expertise across deposit systems
Business model expertise across deposit systems 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 ownersh
Slide 34: A split-responsibility model
A "split-responsibility" model is when a network operator provides redemption points and ensures recycling Roles and responsibilities in the New South Wales Australia deposit return system 35
Slide 35: Cash flow profiles of the two business models
Cash flow profiles of the two business models Illustrative cash flow profiles per machine Cash flow Higher initial sales Throughput model return profile Higher CAPEX needs Higher recurring revenue Up-front investment Bigger risk Year 0 Time More responsibility Sales & Service Throughput Higher net p
Slide 36: 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 37: Advanced digital platform leveraged across stakeholder groups
Advanced digital platform leveraged across stakeholder groups TOMRA Productivity Gain Consumer Engagement API/Data System Integration DIGITAL PLATFORM Retail Productivity Gain 38
Slide 38: Market leader in reverse vending solutions
Market leader in reverse vending solutions 80 000 10 000- 80 000 Innovation champion # of installed RVMs 5 000- 10 000 500- 5 000 Digital platform Trusted partner <500 Annual revenue from RVM sales 1-10 11-20 21-30 31-40 >40 Number of RVM markets Leading technology Service network Solutions portfoli
Slide 39: TOMRA Recycling Mining
(ii. © TOMRA RECYCLING MINING Sau A a we :
Slide 40: 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 41: Automation with TOMRA units
Automation with TOMRA units 42
Slide 42: 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 43: 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 44: 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 45: First-class customer service worldwide
FIRST-CLASS CUSTOMER SERVICE WORLDWIDE for highest sorting performance for lowest downtime for plannable costs Having the best systems is not enough without a dedicated service team to keep them running in top condition. Unlocks new opportunities Secure access to information 46
Slide 46: 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 47: 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 48: 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 49: 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 50: 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 51: …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 52
Slide 52: Circular Economy – Innovating through collaboration
Circular Economy – Innovating through collaboration Post Pre- Washing Flake Compoun Productio consumer sorting ding n waste sortin g The demo plant covers the process from post consumer waste to production of recycled polymers. PET PE PE PE PP PP PVC PUR PS Other 8% 30% 19% 10% 8% 6% 19% PET is the
Slide 53: 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 Tightening regulation Access to capital Commodity price Consumer awareness fluctuatio
Slide 54: 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 55: 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 56: 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 Political climate Access to capital Commo
Slide 57: TOMRA Food
TOMRA FOOD 58
Slide 58: Food for thought
FOOD FOR THOUGHT • 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 Sources: Wrap, WEF, Accenture (Future of Food), McKinsey, FAO 59
Slide 59: 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 60
Slide 60: Creating value in various parts of the food process
Creating value in various parts of the food process 61
Slide 61: 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 62: 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 63: 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 64
Slide 64: Top Food Categories
Top Food Categories Potatoes Nuts & Dried Fruit Vegetables Apples Citrus Berries Cherries Fresh Cut Avocados Kiwifruit Grains & Seeds 65
Slide 65: 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 66: 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 67: Food competitive landscape
Food competitive landscape Freefall >3,000 Belt TOMRA competitive positioning • Broadest and deepest technology # of installed machines base 1,000- • Widest range of categories and 3,000 applications • Most comprehensive geographic reach (~80 countries) 0-1,000 10-25 markets 25-50 markets >50 market
Slide 68: Recycling, Mining and Food: connected sorters
Recycling, Mining and Food Connected Sorters TOMRA Insight Users 01/2018 01/2019 01/2020 01/2021 69
Slide 69: Global Leader
Global Leader Sorting & Artificial Grading Intelligence Data & Service & Analytics Support 70
Slide 70: Our food sorting customers
Our food sorting customers PROCESSED FOOD INDUSTRY FRESH PRODUCE INDUSTRY 71
Slide 71: TOMRA Food Locations
TOMRA Food Locations 1400+ TOMRA FOOD TEAM 32 GLOBAL OFFICES 4 PRODUCTION FACILITIES PRESENCE 80 countries 72
Slide 72: Market growth expectations – food
Market growth expectations – food MARKET DEFINITION FOOD CAGR 6-8% Sensor-based sorting and grading equipment • 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 73: Historical group financials and targets
HISTORICAL GROUP FINANCIALS AND TARGETS 74
Slide 74: Group financials development – solid track record
Group financials development – solid track record Revenues Gross contribution and margin 12 000 5 000 50% 4 500 45% 10 000 4 000 40% 3 500 35% 8 000 3 000 30% MNOK MNOK 6 000 2 500 25% 2 000 20% 4 000 1 500 15% 2 000 1 000 10% 500 5% 0 0 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010
Slide 75: Currency risk and hedging policy
Currency risk and hedging policy Measured against NOK *Average 3Q21 vs 3Q20 10% change in NOK towards other 105 currencies will impact: 103 101 Revenues Expenses EBITA 99 97 EUR* 4.5% 4.0% 7.0% -3.2%* 95 USD 3.5% 2.5% 8.0% 93 -4.1%* OTHER2 2.0% 3.0% -4.0% 91 89 ALL 10.0% 9.5% 11.0% 87 3Q20 4Q20 1Q21
Slide 76: Financial highlights | Balance sheet and cash flow
Financial highlights | Balance sheet and cash flow 30 September 31 Dec 2021 2020 2020 Amounts in NOK million ASSETS 11,414 12,264 10,977 Intangible non-current assets 3,798 4,121 3,846 Tangible non-current assets 2,160 2,398 2,371 Financial non-current assets 390 420 353 Inventory 1,795 1,819 1,492
Slide 77: TOMRA Collection – segment financials
TOMRA Collection – segment financials Revenues Gross contribution and margin 5 500 2 200 50% 5 000 45% 2 000 40% 4 500 1 800 35% 4 000 30% 1 600 MNOK MNOK 3 500 25% 1 400 20% 3 000 1 200 15% 2 500 10% 2 000 1 000 5% 1 500 800 0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2
Slide 78: TOMRA Recycling Mining – segment financials
TOMRA Recycling Mining – segment financials Revenues Gross contribution and margin 1 750 920 0,6 1 700 900 0,5 880 0,4 1 650 MNOK MNOK 860 0,3 1 600 840 0,2 1 550 820 0,1 1 500 800 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 EBITA a
Slide 79: TOMRA Food – segment financials
TOMRA Food – segment financials Revenues Gross contribution and margin 3 500 1 500 0,45 3 000 0,4 1 400 0,35 2 500 1 300 0,3 2 000 1 200 MNOK MNOK 0,25 1 500 1 100 0,2 0,15 1 000 1 000 0,1 500 900 0,05 0 800 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 2016
Slide 80: Our ambitions 2018 - 2023
Circular Economy Our ambitions 2018 - 2023 Dividend Revenue payout growth EBITA- Capital margin Structure ROCE new Future of Food >10% CAGR 40-60% projects Maintain on average of EPS Towards investment >18% grade profile >20% 81
Slide 81: Shareholder structure
Shareholder structure Top 10 shareholders as of 30 September 2021*) Shareholders by country**) 1 Investment AB Latour 31 200 000 21,1 % 2 Folketrygdfondet 11 541 401 7,8 % 13% 24% 3 APG Asset Management 7 094 564 4,8 % 4% 4 Candriam Belgium 3 643 439 2,5 % 5% 5 The Vanguard Group 3 170 098 2,1 % 6%
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