Tomra Systems Q1 Profit Misses by 35% on Recycling Woes

Core Financial Highlights

Tomra Systems ASA reported first-quarter adjusted EBITA of EUR 26 million, a figure approximately 35 percent below analyst expectations. Total group revenues grew 9 percent year-over-year to EUR 334 million, though this was 2 percent short of consensus estimates. The results signal significant headwinds in key segments.

Divisional Performance Breakdown

The earnings shortfall was primarily driven by the Recycling division, which saw revenues decline 19 percent to EUR 37 million and posted an EBITA loss of EUR 5 million. This was attributed to low installation volumes and an unfavorable product mix. In contrast, the Collection and Food divisions showed resilience, with revenues increasing by 12 percent and 13 percent respectively, demonstrating more stable demand.

Outlook and Market Implications

The company's order backlog reveals diverging trends. The Recycling backlog fell 20 percent year-over-year, while the Food backlog increased 10 percent. For the second quarter, Tomra expects an improved product mix and a 50 percent conversion ratio in Recycling, indicating a cautious path to recovery. The Food division is projected to achieve a 70 percent conversion ratio.

Summary

Tomra Systems' Q1 results highlight significant pressure on its Recycling segment, which overshadowed growth in other areas. Investors will closely watch for a recovery in installation volumes and margin improvements in the upcoming quarters to gauge the company's trajectory.

FAQ

Q: What was the main reason for Tomra Systems' Q1 profit miss?
A: The primary cause was weakness in the Recycling division, which faced low installation volumes and an unfavorable product mix, leading to a 19 percent revenue decline and an EBITA loss.

Q: Which Tomra divisions performed well in Q1?
A: The Collection and Food divisions performed well, with revenues growing 12 percent and 13 percent year-over-year, respectively.

Source: Investing.com