Tomra Systems (TOM) CMD 2024 summary

Strategic direction and financial targets

• Strategy confirmed to accelerate growth in core businesses (Recycling, Collection, Food), develop adjacent opportunities, and become a fully circular, safe, and inclusive company, with a focus on innovation, resource optimization, and a decentralized operating model.

• Targets reaffirmed: 15% CAGR through 2030, 18% EBITDA/EBITA margin, and new return on capital employed (ROCE) target above 18%, with a 40%-60% dividend payout policy and commitment to maintain investment-grade status and Net Zero by 2050.

• Service revenue share expected to rise from 42% to nearly 50% by 2030, supporting recurring revenue and profitability.

• Growth to be driven primarily by Collection and Recycling (double-digit CAGR), Food (mid to high single digits), and selective M&A and Horizon ventures.

• Sustainability targets include Net Zero by 2050, science-based targets for emissions reduction, >90% sustainable materials in new products, 100% renewable electricity, and >80% reduction in operational transport emissions by 2030.

Business segment strategies and operational focus

• Collection: Market leader with 85,000+ installations, aiming to collect up to 500 billion drink containers annually by 2030, focusing on DRS markets and targeting high-teens EBITDA/EBITA margin.

• Recycling: Global leader in sensor-based sorting, targeting double-digit growth, low-to-mid 20s EBITA, and strong profitability, with service revenue growth in the high teens.

• Food: Undergoing restructuring to focus on profitability first (10%-11% run rate by year-end), then aiming for mid-teens EBITDA/EBITA and growth above market rates by 2030, with a focus on technology and service innovation.

• Adjacent business (Horizon): Ventures in feedstock, textiles, and reuse progressing through proof-of-concept and scaling, with strict capital return requirements (>15% IRR, 18% EBITDA/EBITA at scale), and targets significant impact by 2035.

• Over 110,000 installations in more than 100 markets, with 2023 revenues of EUR 1,290 million and 5,400 employees globally.

Market drivers and sustainability

• Key growth drivers: Decarbonization, regulation (notably EU Packaging and Packaging Waste Regulation), modernization/automation, demographics, and resource scarcity.

• Regulatory momentum, especially in Europe, is expected to drive adoption of deposit return systems and recycling technologies.

• Aims to enable circularity for 180m tons of material, collect 500bn drink containers, reduce 30% food loss, recover 2m tons of plastics, enable 1.5m tons fiber-to-fiber recycling, and avoid 400m single-use packages annually.

• Focus on sustainable product design, employee diversity, and top quartile employee satisfaction.

• Investments in R&D, new markets, and advocacy to remain at 6%-8% of revenues, with maintenance spend at 4%-5%.