TOMRA SYSTEMS ASA ADR 2026 Q3
Earnings Overview & AI Insights

Earnings Performance

Summary of Financial Performance: Total group revenue reached EUR 366 million, up 20% year-on-year, with EBITDA rising 55% to EUR 47 million and group gross margin at 43%. Collection was the largest driver, with revenue of EUR 217 million (+21%) and EBITDA of EUR 36 million; Recycling revenue was EUR 54 million (+34%) with EBITDA of EUR 6 million; Food revenue was EUR 86 million (+13%) with EBITDA of EUR 11 million; Horizon revenue was EUR 10 million with negative EBITDA of EUR 2 million. Cash flow from operations was strong at EUR 112 million, working capital improved to 16% of revenue, and net debt declined to EUR 593 million.

Company Outlook & Strategy: Management reiterated confidence in long-term growth, citing structural tailwinds from regulation, automation, circularity, and resource scarcity. For 2026, Collection revenue guidance was narrowed to EUR 410 million–EUR 430 million in the second half, Recycling full-year revenue to EUR 205 million–EUR 215 million, Food to EUR 347 million–EUR 357 million, and Horizon to EUR 45 million–EUR 50 million. The company emphasized disciplined capital allocation, profitability improvement, and scaling new-market opportunities, especially in the U.K., while maintaining ambition to become the market leader in Collection.

Key Industry Trends: The U.K. deposit return scheme remains a major growth opportunity, with a likely Phase 1 rollout of about 25,000 RVMs and further expansion in later phases. France paused DRS consultation, but management still expects eventual implementation; Bulgaria advanced draft nationwide DRS legislation; and Wales appointed the same DMO as the rest of the U.K., supporting harmonization. In Recycling, metals and aluminum remained strong, while plastic recycling and waste recovery stayed weak due to high financing and energy costs. The EU’s PPWR coming into force was highlighted as a positive long-term driver for recycling demand.

Operational Highlights: Collection saw strong execution in existing markets, including Poland, Singapore, and Germany, plus early U.K. installations and the launch of the compact B3 machine for smaller stores. Recycling benefited from two large mining orders, strong metal demand, and cost reductions; management is also exploring divestment of the mining subsegment to sharpen strategic focus. Food posted double-digit growth with strong citrus, blueberry, and vegetable momentum, supported by sales initiatives in EMEA. Horizon advanced c-trace, ramped Områ, and secured pilots for the reuse business with two major European amusement parks.

Challenges & Risks: Management cited competitive pressure in new markets, especially in the U.K., where smaller machines are less differentiated and rollout timing is uncertain. In Recycling and Food, customers remain cautious on capital spending, with longer decision cycles and subdued demand in some segments, particularly plastics and potatoes. Inflation, currency effects, high energy costs, and rising incineration costs at Områ were also noted as margin pressures. Working capital timing tied to new market rollouts, especially the U.K., could affect cash conversion.

Key Analyst Questions & Responses: Analysts focused on U.K. revenue phasing and whether revenue would be backloaded. Management said Phase 1 will be roughly 25,000 machines, with a small portion in 2026, most in 2027, and spillover into 2028; Phase 2 will depend on return-rate adoption and small-store penetration, likely extending over several years. On tenders, management said significant large contracts remain outstanding and most should be closed by year-end. On Recycling, management confirmed the large mining orders should be treated as exceptional one-offs, not representative of the normal run-rate, and reiterated that the mining business is relatively small and being assessed for divestment.