Tomra Systems Asa · OSL:TOM
Tomra Systems Asa — Investor Day (September 2024)
87 slides from Tomra Systems Asa's investor day presentation, Sep 5, 2024
Slide 1: Capital Markets Day 2024
TOMRA Capital Markets Day 2024 5 September 2024 Alicante, Spain
Slide 2: Agenda
Agenda TOMRA Group Strategy – Tove Andersen TOMRA Recycling – Volker Rehrmann TOMRA Collection – Marius Fraurud TOMRA Food – Harald Henriksen Develop Adjacent Business – Lars Enge TOMRA Financials – Eva Sagemo
Slide 3: 3
3
Slide 4: 4
4 4
Slide 5: 5
5
Slide 6: TOMRA Strategy
TOMRA Strategy Accelerate growth in core and develop adjacent opportunities while becoming a fully circular business and being safe, fair and inclusive 6 6
Slide 7: Strategic ambition
Strategic ambition Revenue EBITA Return on Dividend Capital CO2e growth margin Capital Employed payout structure Net 15% at 18% >18% 40-60% Investment Zero CAGR of EPS grade over the cycle by 2030 by 2030 by 2050 7 7
Slide 8: We have shaped circularity and resource optimization for over 50 years
We have shaped circularity and resource optimization for over 50 years through innovation, entrepreneurship, and thought leadership TOMRA Horizon Adjacent business building leveraging our technology and expertise TOMRA Food Acquired 2011-2018 TOMRA Recycling Acquired in 2004, organically developed s
Slide 9: We have consistently delivered profitable growth while enabling emission avoidance
We have consistently delivered profitable growth while enabling significant emission avoidance through our products Avoided emissions from Revenue growth, EUR million Annual dividends (DPS), NOK TOMRA product use*, million tons CO2 1,288 +11% 3.00 CAGR +9% CAGR +6% CAGR 1.95 566 0.68 2013 2015 2017
Slide 10: We are an impact leader providing thought leadership
We are an impact leader providing thought leadership and pushing the boundaries on technology and solutions … … shaping existing markets and creating new ones. 10
Slide 11: We operate in markets where we take a leading global position
We operate in markets where we take a leading global position and make a meaningful impact … … optimizing how resources are obtained, used, and reused. 11
Slide 12: Innovation, passion, and responsibility are our core values
Innovation, passion, and responsibility are our core values … … and we have an entrepreneurial culture where we empower for ownership. 12
Slide 13: We have a decentralized operating model
We have a decentralized operating model characterized by autonomy and accountability Board of Directors Group functions < 2 % of turnover • Finance • HR President and CEO • Strategy and M&A • Branding and Positioning • Sustainability • IT and cyber security Group Management Collection Recycling Food
Slide 14: The drivers for increased circularity have never been stronger
The drivers for increased circularity and resource optimization have never been stronger than now Decarbonization Regulation Modernization & Automation Demographics Resource scarcity 14 14
Slide 15: TOMRA Strategy
TOMRA Strategy Accelerate growth in core Develop adjacent business Collection Recycling Food Horizon M&A Invest in Invest in Improve profitability Long-term Selected value- double digit growth double digit growth then grow business building adding verticals Fully circular business and being safe, fa
Slide 16: Our vision is to lead the resource revolution
Our vision is to lead the resource revolution, to… Increase today’s Reduce today’s 7% of resources which are 30% of consumable food consumed circularly1 which is lost and wasted2 1) The Circular Gap Report 2024, Circle Economy Foundation. 2) ) Emissions Gap Report 2023, UN Environment Programme. 16
Slide 17: TOMRA Recycling
TOMRA Recycling Giving every piece of material we sort and analyze – may it be waste, metal or ore – a value. 17 17
Slide 18: We support our recovery and recycling customers
We support our recovery and recycling customers to enable circularity and decarbonization TOMRA Recycling’s value chain positioning Industries Waste streams Material recovery Recyclers Packaging Rigid Flexible Paper UBCs ...more plastics plastics Automotive New Metal Plastics Electrical & electronic
Slide 19: Global leader in sensor-based technology enabling recycling and mining
Global leader in sensor-based technology Installed base worldwide enabling recycling and mining Americas ~1 700 Koblenz& Hamburg Germany Senec, Slovakia Parma, Italy EMEA Charlotte, Istanbul, Seoul, USA Turkey Korea ~7 100 Kunshan, China Xiamen, China EUR APAC ~500m Johannesburg, South Africa Sydney
Slide 20: Optical sorting market to grow at 8-10% until 2030
Decarbonization, legislation and modernization is driving optical sorting market to grow at 8-10% until 2030 Regulation Decarbonization Modernization & Automation • EPR, PPWR, ELV Regulation • Companies signing up to • Increased competition and encourage more waste science-based targets to net focus
Slide 21: Emergence of Extended Producer Responsibility beyond packaging
Emergence of Extended Producer Responsibility (EPR) beyond packaging increases adoption of automated sorting EPR for packaging status Further EPR schemes under consideration North South America America Europe Asia Oceania Africa Packaging ELV & WEEE Wood Textile Mandatory EPR for EPR being developed
Slide 22: Macro drivers present opportunities for sensor-based sorting
Macro drivers present abundant opportunities for the sensor-based sorting market, leading to sustained growth More waste volume Regulation and decarbonization encourage the amount of waste to be sorted in existing waste streams New waste streams Industries becoming more circular enable new waste str
Slide 23: TOMRA Recycling Strategy
TOMRA Recycling Strategy We will strengthen our leading position in core markets, develop innovative solutions to enter new waste streams, and transform our service offerings. 23 23
Slide 24: We target double digit revenue growth and maintained profitability
We target double digit revenue growth, maintained profitability and reduced carbon footprint Double digit Optimize EBITA % Decrease CO2 footprint Revenue Growth at low-to-mid 20’s aligned with SBTi targets EUR million EBITA % SBTi Scope 1-3 emission targets >10% 55% 62% CAGR reduction reduction 23%
Slide 25: We are the technology leader in an evolving recycling market
We are the technology leader in an evolving recycling market Technology leader Value drivers Leading position while expanding to new segments Commitment to Most extensive sensor Advisory and close New success with AI and innovation and cutting- portfolio for high- collaboration with our LIBS technol
Slide 26: We will transform our service offerings
We will transform our service offerings for superior client deliveries Transform service offerings Value drivers Increase recurring Servitization strategies Technology New service business Rise of remote revenue share by and “as-a-service” advancement & models to reduce and field service strengtheni
Slide 27: Key takeaways
Our 2030 ambition: Key takeaways Enable additional tons material for circularity Demand for more and better feedstock Technology and market leader Double digit growth with 180 M to give every piece of material a value by sorting and analyzing it and enabling its best use strong profitability 27 27
Slide 28: TOMRA Collection
TOMRA Collection Transforming society’s habits to keep valuable resources in a continuous loop of use and reuse 28
Slide 29: Continued strong profitable growth
Maintain leadership Unique in existing markets, Continued strong position & market capture new markets profitable growth momentum & prepare for beyond 2030 29
Slide 30: Our North Star
* Our North Star 500 Responsibly collecting 500 billion drink containers for clean loop recycling and reuse \\oarac (|, aaa Wiaran {), af |. VM Jt]. OV /\\\ 205¢
Slide 31: The global leader in reverse vending and collection solutions
The global leader in reverse vending and collection solutions Collecting TOMRA Collection presence 46 bn Collecting Americas ~13 800 46 bn containers annually worldwide containers annually worldwide e EMEA ~66 200 APAC ~5 000 Total ~85 000 31 31
Slide 32: Flexible value chain positioning depending on local needs
We solve customers' DRS challenges through flexible value chain positioning depending on local needs TOMRA Collections' value chain positioning VALUE CHAIN BUSINESS MODELS Buy Sales Service Consume Produce/ Import ~ 40% ~ 20% System Operator share of revenue today share of revenue today Network Oper
Slide 33: Legislation, automation and decarbonization drive DRS expansion
Legislation, automation and decarbonization drive the expansion of DRS systems worldwide Regulation Modernization Decarbonization & Automation SUPD & PPWR drive implementation of DRS Labor cost and margin pressure lead to Industry committing to SBTi targets pushing to achieve collection targets abov
Slide 34: Our ambition is to continue our trend of profitable growth
Our ambition is to continue our trend of profitable growth Double Digit Increase EBITA % Decrease CO2 footprint Revenue Growth to high 10’s aligned with SBTi targets EUR million EBITA % SBTi Scope 1-3 emission targets >10% 19% 55% 62% >18% reduction reduction +15% CAGR 18% 17% CAGR 15% 697 612 565 4
Slide 35: Total potential to collect
Total potential to collect (based on global sales of drink containers in 2023) ~2 Trillion (11%) (11%) (78%) Total drink containers sold 35
Slide 36: Total potential to collect
Total potential to collect Existing conventional DRS (based on global sales of drink containers in 2023) ~2 Trillion (11%) (11%) (78%) Total drink Existing containers sold Conventional- DRS 36
Slide 37: Total potential to collect
Total potential to collect Existing conventional DRS Coming conventional DRS (based on global sales of drink containers in 2023) ~2 Trillion (11%) (11%) (78%) Total drink Existing Coming containers sold Conventional- Conventional- DRS DRS 37
Slide 38: Total potential to collect
Total potential to collect Existing conventional DRS Coming conventional DRS Rest of the world (based on global sales of drink containers in 2023) ~2 Trillion (11%) (11%) (78%) Total drink Existing Coming Rest of world containers sold Conventional- Conventional- DRS DRS 38
Slide 39: Growth in existing DRS markets by maintaining industry leadership
We will drive significant growth in existing DRS markets by maintaining our industry leadership Existing EXISTINGDRSMARKETS markets Maintain industry leadership Technology leadership to Solution- and Increased trigger replacement of business model throughput & material expected 40-50% share installe
Slide 40: Growth in coming DRS markets leveraging current strengths
We will drive significant growth in coming DRS markets by leveraging our current strengths Existing COMING DRS markets MARKETS Publicly announced upcoming DRS launch New market Austria Quebec capture Poland Uruguay Tasmania Singapore Legislative considerations and planning Greece UK Czech Rep. Turke
Slide 41: Growth beyond 2030 in rest-of-the-world markets
We will position for growth beyond 2030 in rest-of-the-world markets by exploring alternative collection solutions Existing REST OFDRS THEmarkets WORLD Long-term positioning and investment First-hand experience Holistic solution provider Solution- & business from pilot concepts in of circular soluti
Slide 42: Steadily increase the EBITA margin towards 2030
Our ambition is to steadily increase the EBITA margin towards 2030 while realizing significant growth EBITA margin Increase to high 10’s Increase operational Launch of new Ramp-up costs and efficiency in existing innovative products initial warranty period DRS markets, both and volume growth in redu
Slide 43: We aim to decouple our growth from our footprint
by reducing the We aim to decouple emissions from our our growth from our operations and footprint increasing the circularity of our products Decrease CO2 footprint aligned with SBTi targets 43 43
Slide 44: Key takeaways
44 Our 2030 ambition: Key takeaways 130 on the way to Responsibly collecting 500bn drink containers Continued strong profitable growth Unique position & market momentum for clean loop recycling and reuse Maintain leadership in existing markets, capture new markets & prepare for beyond 2030 44 44
Slide 45: TOMRA Food
TOMRA Food Our sorting and grading solutions help to maximize food safety and minimize food loss by making sure Every Resource Counts. 45
Slide 46: Key messages
Key messages Global Leader Restructuring Profitable Growth 46 46
Slide 47: We are the global leader in food sorting and grading
We are the global leader in food Installed base worldwide sorting and grading Americas ~6,200 EMEA ~6,000 APAC ~2,700 EUR ~800m Addressable market* Regional HQ Production R&D hub Total ~14,900 47 47 * Excluding other non-sensor-based sorting or peeling equipment and only including focus segments The
Slide 48: Our technology optimizes the value of food for producers and packers
Our technology optimizes the value of food for producers potatoe and packers TOMRA Food’s value chain positioning Value chain Processing & Farming Harvesting Packing Distribution & sales Consumption repacking Our technology serve multiple purposes while enhancing value for producers and processors R
Slide 49: We are focused on high value market segments
Focus segments Potatoes Kiwifruit Blueberries We are focused on high value market segments, Apples Processed fruit Nuts where technology can differentiate Cherries Processed vegetables Citrus 49
Slide 50: Global trends underpin market acceleration for automated sorting
Global trends underpin market acceleration that fuel the rise of automated sorting technology Demographics Modernization & Automation • Population growth driving increased • More detailed requirements demand for food • Pressure on labour cost and • Rising middle class change dietary availability hab
Slide 51: First, we improve profitability then target growth
First, we improve profitability then target growth Mid-to-high single digit Improve EBITA % to Decrease CO2 footprint revenue growth mid 10’s aligned with SBTi targets EUR million EBITA % SBTi Scope 1-3 emission targets +1% CAGR 55% 62% 11% 11% 6-7% reduction reduction 358 CAGR 9% 308 324 320 On tra
Slide 52: TOMRA Food Strategy
TOMRA Food Strategy We will first complete the restructuring: delivering profitability by focusing on customer satisfaction, and then grow through technology and services innovation 52 52
Slide 53: Phase 1 is focused on profitability and customer satisfaction
Phase 1 is focused on profitability and customer satisfaction 1. Restructuring Value drivers Focus & simplify Establish local partnerships our portfolio and operations to complement our solutions, to reduce complexity streamlining delivery and installation Implement a platform approach Improve servi
Slide 54: Phase 2 will be about profitable growth
Phase 2 will be about profitable growth through technology leadership and service innovation 2. Profitable Growth Value drivers Expand sorting opportunities Innovative service products to increase share of wallet that add value across of our customers the whole customer life cycle Digital and data o
Slide 55: Road to mid 10's EBITA margin ambition
We start with our restructuring program but see further opportunities to improve our margin Road to mid 10’s EBITA margin ambition EBITA margin, illustrative Target 10-11% EBITA through ongoing restructuring program Mid 10’s Margin expansion from operational leverage as we grow Positive revenue mix
Slide 56: Key takeaway
Our 2030 ambition: Key takeaway Contribute to reduce the We are the global leader and we aim to strengthen this position by delivering leading customer satisfaction We will complete the restructuring, delivering on profitability 30% of food loss and waste while enforcing food safety and maximizing t
Slide 57: Develop Adjacent Business
Develop Adjacent Business 58 58
Slide 58: Develop adjacent Business
Develop adjacent Business TOMRA Horizon Adjacent M&A Exploring new adjacent business Long term business Selected value-adding opportunities and alternative business building verticals models leveraging our technology and decades of know-how in order to facilitate and accelerate the transition to cir
Slide 59: Horizon is a vehicle to broaden the TOMRA portfolio
Horizon is a vehicle to broaden the TOMRA portfolio and create long term value Innovate and lead the Broaden our Create additional resource revolution portfolio profitable growth 60
Slide 60: Capital allocation thresholds
Capital allocation thresholds We are looking for opportunities that issues,have the with the potential become a sizeable business to right potential Business models solving global Within market and technology that is ripe for scaling over the next few years >15% IRR 1 2 What we are looking for >15%
Slide 61: Our three ventures are past the business blueprint phase
Our three ventures are past the business blueprint phase, ready to demonstrate and scale technology Start commercial scaling Launch and start TOMRA Feedstock Proof-of-Concept TOMRA Reuse Design business TOMRA Textiles blueprint Start exploration 62 62
Slide 62: TOMRA Feedstock
TOMRA Feedstock TOMRA Feedstock utilizes our waste sorting technology to create new value chains that More than 70% recover plastic waste which is of plastics is typically incinerated or landfilled landfilled or today. incinerated in Europe Through advanced sorting plants, we turn this material into
Slide 63: TOMRA Feedstock
Key needs to believe 1 Regulatory push for more plastics recycling 2 Industry committing to more recycled content in products TOMRA Feedstock Advancements in mechanical and chemical 3 recycling technology and capacity • Two plants on track for start- Post-consumer plastics waste value chain in Europ
Slide 64: TOMRA Textiles
TOMRA Textiles TOMRA Textiles is on a mission to close the gap between waste textiles and fiber-to-fiber Less than 1% of recycling, using our unique textiles are kept sensor-based sorting technology in a closed loop to create solutions and develop today value chains that enable textiles circularity
Slide 65: TOMRA Textiles
Key needs to believe 1 Regulatory push towards a circular textiles value chain 2 Recycling technologies matured and scaled for TOMRA Textiles main fiber fractions 3 Brands committing significant off-take for recycled material • Setting up dedicated Textiles Traditional linear textiles Tech Centre Vi
Slide 66: TOMRA Reuse
TOMRA Reuse TOMRA Reuse leverages our Takeaway reverse vending technology to packaging create open managed systems create up to and complete infrastructures for 50% of the reusable takeaway packaging for waste in city’s cities and events around the public bins world – reducing waste and optimizing r
Slide 67: TOMRA Reuse
Key needs to believe 1 Regulations on city, country or European level Reuse solution is convenient for consumers, 2 ensuring high adaption TOMRA Reuse Reuse solution is convenient for businesses 3 reducing the barriers to shift to Reuse BUY CONSUME • Aarhus city pilot up and takeaway from at home/in
Slide 68: 2035 north star
2035 north star TOMRA Feedstock TOMRA Textiles TOMRA Reuse Recover 2 mton Enable 1.5 mton Avoid 400 million mixed plastics from fiber-to-fiber recycling by single use takeaway incineration or landfill, scaling automated sorting packaging annually making it available for and shaping circular through
Slide 69: Selective adjacent M&A plays to diversify and strengthen TOMRA
We will target selective adjacent M&A plays to diversify and strengthen TOMRA Purpose Capital allocation framework What we look for M&A to diversify and Selective investments backed Purpose driven businesses strengthen the TOMRA by strong business cases well positioned in high- portfolio and create
Slide 70: Key takeaway
Key takeaway We see strong potential for value creative growth through developing business adjacent to TOMRA We apply strict capital return requirements to ensure we optimize our capital allocation across the portfolio 71 71
Slide 71: TOMRA Financials
TOMRA Financials 72
Slide 72: Strategic ambition
Strategic ambition Revenue EBITA Return on Dividend Capital CO2e growth margin Capital Employed payout structure Net 15% at 18% >18% 40-60% Investment Zero CAGR of EPS grade over the cycle by 2030 by 2030 by 2050 73
Slide 73: We are positioning our portfolio for profitable growth
We are positioning our portfolio for profitable growth TOMRA ambition Growth Longer term selective growth Invest in growth Horizon TOMRA ambition Today -> 2030 >10% CAGR 2027 Collectio Collectio Collection Recycling Today Today ->2030 ->2030 2030 <10% CAGR 2024-26 Food Today Improve Harvest Profitab
Slide 74: We remain committed to our ambition of 15% annual growth
We remain committed to our ambition of 15% annual growth Revenue ambition EUR billions, illustrative Adjacent Food Revenue Revenue growth growth 15% Recycling 15% CAGR CAGR over the cycle 1.3 billion EUR 0.9 billion EUR 0.3 0.3 0.3 Collection 0.2 0.7 0.5 2019 2023 ... 2030 75
Slide 75: We have a solid underlying business generating growing revenues
We have a solid underlying business generating steadily growing revenues There is significant growth potential for TOMRA even before …and we have an ambition to considering new deposit markets in Collection… increase the share of services Revenue, TOMRA Group Revenue split, core divisions EUR millio
Slide 76: We will increase EBITA to 18% by 2030
Our profitability target stay firm, and we will increase EBITA to 18% by 2030 Road to 18% EBITA margin ambition EBITA margin, illustrative 18% EBITA EBITA EBITA margin margin Faster growth in Contribution higher margin from investments at 18% at divisions into new business 13%* Efficiency as they sc
Slide 77: Historically robust cash flows supporting capital allocation
TOMRA has historically generated robust cash flows supporting our capital allocation Historical operating cash flow EUR millions 175 150 125 100 75 50 25 0 2019 2020 2021 2022 2023 78
Slide 78: Disciplined capital framework and allocation prioritization
We have a disciplined capital framework and allocation prioritization Prioritization of capital allocation Adjacent Dividends Growth in core investments 79
Slide 79: Our dividend policy is a cornerstone of TOMRA
Our dividend policy is a cornerstone of TOMRA and will be kept unchanged Dividend policy Dividend payout % NOK per share 58% 60% 54% 52% 50% 44%* 40% of EPS 2019 2020 2021 2022 2023 80 *269% of EPS including extraordinary dividends
Slide 80: Invest in accelerated growth within core divisions
We plan to invest in accelerated growth within our core divisions while supporting selected adjacent opportunities Future oriented spending Maintenance Accelerate growth in Core Adjacent Maintenance CAPEX spend Future oriented spend* Future oriented spend ~4-5% ~6-8% Project dependent of revenues of
Slide 81: We are focused on reaching a ROCE above 18%
We are focused on reaching a ROCE above 18% Return On Capital Employed ROCE incl. adjacent* Percentage Return Return on on Capital Capital Employed Employed 23% >18% more than 19% 19% 19% > 18% 18% 17% by 2030 by 2030 2019 2020 2021 2022 2023 ... 2030 *ROCE calculated as rolling 12M EBITA divided by
Slide 82: Maintaining investment-grade status is important
Maintaining investment-grade status is important for us and we expect our rating will remain stable Capital structure Financing Bonds and other loans* RCF drawn Undrawn credit facilities Status EUR millions 200 Scope Ratings June 2024 Business risk profile: BBB+ 150 Undrawn Financial risk profile: A
Slide 83: Committed to reach our sustainability targets by 2030
We are committed to reach our sustainability targets across material topics by 2030 Sustainable Employee value Climate product design proposition impact Our sustainability targets towards >90% sustainable materials and Grow female representation in 100% renewable 2030 components in all new products
Slide 84: We have developed our SBTi targets
We have developed our SBTi targets as part of our pathway to reach net zero Net Zero Decarbonization Plan Target Scope 1 & 21 Scope 32 Gap to close Illustrative, figures are early estimates and pending SBTi verification , tCO2e per EURm Initiatives to reduce net emissions are identified where we pla
Slide 85: Strategic ambition
Strategic ambition Revenue EBITA Return on Dividend Capital CO2e growth margin Capital Employed payout structure Net 15% at 18% >18% 40-60% Investment Zero CAGR of EPS grade over the cycle by 2030 by 2030 by 2050 86
Slide 86: 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
Slide 87: www.TOMRA.com
AS TOMIRA www.TOMRA.com