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1
Another strong quarter for TOMRA
• Strong overall performance – Revenues of 1,068 MNOK (+67 percent vs. 641 MNOK in third quarter 2005)– Operating profit of 194 MNOK (71 MNOK in third quarter 2005)– Cash flow from operations of 121 MNOK (66 MNOK in second quarter 2005)
• Performance in TOMRA excluding Germany is very good– 12 percent growth in revenues versus third quarter last year, 14 percent YTD – Gross margin remains stable– Opex has decreased versus last year despite several new initiatives
• Change in capital structure– Bank loan agreement for 500 MNOK – 3.5 million shares acquired under current buyback program (3.0 million in 3Q)– Extraordinary General Meeting to obtain authorization to buy back another 10
million shares when current program has been completed
2
Financial highlights – Profit and loss statement (IFRS continued operations*)
Figures in NOK million 3Q 2006 3Q 2005 YTD 2006 YTD 2005
1068
645
296
127
0
37635%
Operating expenses 182 180 565 602
Operating profit Operating margin
19418%
7111%
52018%
543%
Excluding 2005 restructuring charges
Gross contribution Gross contribution marginOperating expensesOperating profit Operating profit margin
37635%18219418%
25139%17477
12%
108537%56552018%
2911
66838%5491197%
1738641
299
247
1804
95
755
0
827
647
262
2
349
3
65638%
108537%
25139%
Revenues
• Collection Technology
• Materials Handling
• Industrial Processing Technology
• Development initiatives
Gross contributionGross margin
* Brazilian operations discontinued in August 2005
3
Financial highlights - Balance sheet and capital structure
• Working capital still high due to high inventory of finished goods and significant short-term receivables in Germany
• Cash balance negatively impacted by 123 MNOK in share buybacks during third quarter
• TOMRA will take on a 500 MNOK bank loan in order to change the capital structure of the company– TOMRA currently has a buyback
program in place to acquire 10 million shares, 3.5 million shares have already been acquired
– When 10 million shares have been acquired, TOMRA will ask the AGM for a new authorization to buy back another 10 million shares
– The shares acquired under the new proxy will be deleted at a later stage if not used in connection with M&A
Figures in NOK million 30 Sep 2006
30 Sep 2005
ASSETS 3,269
829
134
651
• Inventory 603 320
• Short-term receivables
1,038 715
• Cash and cash equivalents
15 572
• Intangible assets
3,074
704
146• Leasing equipment
• Other fixed assets 618
4
5
Collection Technology – Financials
Figures in NOK million 3Q 2006 3Q 2005 YTD 2006 YTD 2005
Revenues 645 299
98
103
98
14147%
101
Operating profit in %
14622%
4013%
44124%
516%
Excluding 2005 restructuring charges
Gross contribution Gross contribution marginOperating expensesOperating profit Operating profit margin
24238%9614622%
14147%9546
15%
75342%31244124%
39448%29110312%
• Nordic 88
8271804
282
1238
284
• Central Europe & UK 453
75342%
280
276
271
38246%
• US East/Canada 104
Gross contributionin %
24238%
Operating expenses 96 331312
6
Collection Technology – Highlights
Europe North America
• Revenues of 541 MNOK in 3Q 2006, up 169% versus last year– ~2,150 machines sold and ~150
machines upgraded in Germany – Europe ex. Germany down ~2%
versus last year (strong sales in Denmark and Holland last year)
• Orders for ~200 RVMs received in Germany during 3Q 2006
• Single order for 80 new machines in Norway, 60 to be delivered in 4Q06/1Q07
• Service revenues from mature markets up versus last year, e.g., 7% YTD in the Nordic region and 15% in Western Europe
• Revenues of 16.4 MUSD in third quarter, up 9% versus last year; YTD revenues up 4% measured in USD, 5% measured in NOK
• Revenues are up versus last year due to favorable machine placements and mix effects, partly offset by a 7% decline in container volumes due to a shift in consumption from deposit containers (beer/carbonated soft drinks) to non-deposit containers (bottled water)
• Dialogue & legislative debate for potential expansion to include non-carbonated drinks in the bottle bills in New York and Connecticut
7
Order situation in Germany
ESTIMATES
Order situation in GermanyNumber of machines ordered
• Orders for 8,200 newmachines and 1,600 upgradeshave been placed with TOMRA so far
• Some new orders in 3Q, e.g., TOOM and other REWE stores
• Accumulated orders to competitors have increasedversus 2Q as Sielaff and Trautwein installations arenow also included in figures
• Ongoing discussions with bigretail groups for new orders –machine deliveries most likelyin 2007
9,600 200 9,800
7,200 17,000
Acc. TOMRA order intake per 2Q 2006
Acc. order intake by compe-titors*
Tomra order intake in 3Q 2006
Total orders from Germany
Acc. TOMRA order intake per 3Q 2006
* Based on publicly announced orders and TOMRA estimates
8
Recognition of revenues from Germany
ESTIMATESRevenue recognition of TOMRA’s ordersNumber of machines
• 2,150 new machinesinstalled and 150 existingmachines upgraded in 3Q
• 800 installations scheduledfor 4Q 2006 will be pushedinto 2007 on the request of customers, not as a resultof capacity problems in TOMRA
• Of the 2,400 machines yetto be installed, ~350 areupgrades
4Q05
1Q06
2Q06
3Q06
4Q06
TOTAL
~ 100
~ 2,000
~ 3,000
~ 2,300
~ 1,300
~ 9,800
2007 ~ 1,100
9
PET opportunity in Finland
• Special tax/levy on non-refillable plastic bottles will disappear from 1 january 2008
• The requirement is that a proper take-back system for these containers is established, e.g., that the containers are included in the deposit system
• TOMRA foresees several opportunities related to this change if PET becomes a part of the Finnish deposit system:– Replacement of old machines with vertical infeed (~1,000)– Replacement and upgrades of T-6x0 machines (~1,000)– New backroom solutions
10
11
Materials Handling – Financials
Figures in NOK million 3Q 2006 3Q 2005 YTD 2006 YTD 2005
Revenues 296 247
143
104
6526%
33
3213%
• US East/Canada 144
647755
381
374
16622%
• US West (California) 152
91
364
283
15324%
93
Operating profit in %
4214%
Gross contributionin %
7224%
Operating expenses 30
7510%
609%
12
Materials Handling – Highlights
US East/ Canada US West/ California
• Revenues of 22.6 MUSD, up 2% versus last year; YTD revenues up 4% measured in USD, 5% in NOK
• Revenues are up despite a 6% decline in container volumes due to improved material marketing and PET processing activities in Canada
• Revenues of 24.0 MUSD, up 47% versus last year; YTD revenues up 31% measured in USD, 32% in NOK
• Growth in third quarter driven by 14% container volume growth, third party processing volume growth and attractive commodityprices
13
Change in deposit legislation in California
AluminumAll*
30
35
40
45
50
55
60
65
70
75
80
2000 2001 2002 2003 2004 2005
Development in recycling rates in CaliforniaPercent of sold containers
GlassPET
• California has an ambition to recycle 70% of all beverage containers sold
• To get to 70% recycling rates, the state of California has decided to increase the redemption value from 4/8 cents to 5/10 cents from 1 January 2007
• Increased volumes will have a positive impact on TOMRA’s operations
Value of deposit increased from 2.5 and 5 cents to 4 and 8 cents
* Includes aluminum, glass, PET and other metals and plastic materialsSource: State of California Resources Agency
14
15
Industrial Processing Technology – Financials
Figures in NOK million 3Q 2006 3Q 2005* YTD 2006 YTD 2005*
Revenues 127 95
21
48
12
0
14
4547%
30
Operating profit in %
2016%
1516%
5516%
187%
Excluding 2005 restructuring charges
Gross contribution Gross contribution marginOperating expensesOperating profit Operating profit margin
6350%4120
16%
4547%3015
16%
16848%11355
16%
12146%100218%
• Nordic 14
262349
43
195
55
18
38
• Central Europe & UK 64
16848%
56
129
29
13
35
12146%
• Rest of Europe 27
• US/Canada 10
103113
• Rest of World 12
Gross contributionin %
6350%
Operating expenses 41
* Not including CommoDaS, which was included as of 1 July 2006
16
Industrial Processing Technology – Highlights
Recognition & sorting Volume reduction
• Continued profitable growth in TiTech – Year-to-date revenues up 54%
versus last year– Record order backlog
• CommoDaS with positive contribution– Positive sales development and
sound order backlog– Healthy profit margin
• Highest order backlog in 3 years• Year-to-date revenues up 7%
versus last year• Positive contribution to operating
profits
17
Industrial Processing Technology - Order book
0
20
40
60
80
100
120
140
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06
Order book value* NOK million
**
* Based on currency rates as of 30 September 2006** Includes ~25 MNOK from CommoDaS
18
19
Development initiatives – Status update
• Installation sites defined• Production of centers initiated• First center to be installed in October/
NovemberUK
• 27 RVMs in 6 wards in Tokyo now installed (~125 in total in Japan)
• Several machines to be installed in fourth quarter this year
• On average each machine in Tokyo collects close to 700 units per day
Japan
• First recycling centers opened in Athens in August by TOMRA’s partner
• Remaining centres will follow Q4 2006 and in Q1/Q2 2007
Greece
20
Capital Markets Day in Oslo 9 November to provide more details on non-deposit opportunities
NFF (The Norwegian Society of Financial Analysts) will host a capital markets day for TOMRA on 9 November 2006
Time: Thursday 9 November, 09:00-12:30 (breakfast served from 08:30)Location: Felix Konferansesenter, Aker Brygge, Oslo, Norway
Subject: Growth in non-deposit markets
Presenters: Amund Skarholt, CEOTrond K. Johannessen, SVP Business DevelopmentTerje Hanserud, SVPRune Marthinussen, Managing Director TiTech VisionsortHåkon Volldal, VP Investor Relations & Business Development
Moderators: Ketil Skjåk, Enskilda SecuritiesMerete Opedal, Portfolio manager, AFA, Storebrand Kapitalforvaltning
Registration: By 8 November 2006 to NFF
More information: www.finansanalytiker.no/default.asp?side=aktiv_presinv/tomra.htm
21
22
Sales to Germany in the short term
• There are approximately 13,000 machines left to be awarded before end of 2008– The total market is estimated to be 30,000 machines– 17,000 machines have been ordered so far
• The split of orders between 2007 and 2008 is difficult to predict – Ongoing tests with new customers – timing unknown– Additional volumes from existing customers – timing unknown
• Upgrades/replacement of refillable machines a key priority for 2007
• Actual TOMRA sales will depend on market share and timing of orders, but it will be challenging to match 2006 volumes in 2007
23
TOMRA has several big growth opportunities
INDICATIVE & ILLUSTRATIVE
2007 2008 2009 2010 2011
DRS COMPACTORS IN DENMARK
INITIAL TESCO ROLL OUT
DEPOSIT IN NEW COUNTRIES/STATES
DEPOSIT INITIATIVES HOLLAND/AUSTRALIA/US/EASTERN EUROPE
DEPOSIT WATER NY/CT
NON-DEPOSIT/TRC LIKE SOLUTIONS NEW COUNTRIES
EXPANDED TESCO ROLL OUT
(NORDIC RETAIL CONSOLIDATION) RVM REPLACEMENT
High probability
EXPANDED DEPOSIT LEGISLATION IN FINLAND
Political decisions...
STRONG DEMAND FOR IPT SOLUTIONS
JAPAN ROLL OUT
INCREASING SERVICE REVENUES (CORE+GERMANY)
BROADER APPLICATION OF IPT SOLUTIONS
HIGH VOLUME AVAILABLE WITHIN CALIFORNIAN INFRASTRUCTURE
Medium probability
24
As a result of the many growth opportunities, the base business is expected to continue to develop very favorably
YTD 06 vs. YTD 05 (ex. Germany)
2007 and onwards(ex. Germany)
Revenues >10% growth14% growth
Gross margin StableStable
Opex 4-8% increaseReduced
EBIT ~40% increase 15-25% increase
25
TOMRA’s growth aspiration
INDICATIVE & ILLUSTRATIVE
2005
Base business
With Germany
Surplus EBIT from sale of RVMs to Germany
TOMRA’s profits declined from ~450 MNOK in 2000 to ~200 MNOK in 2005
MNOK
Conceptual EBIT development for TOMRA – not scaled
Significant growth expected:15-25% annual EBIT growth
Future development dependent on German volumes and timing of orders
26
Summing up TOMRA’s growth strategy
• TOMRA has a solid and diversified portfolio of growth opportunities within current strategic scope
• Growth is now less dependent on introduction of deposit and certain legislative frameworks than in the past
• TOMRA’s focus will be on nurturing the base business in order to achieve strong organic growth and create operational leverage
• There will still be markets that decide to introduce deposit as the optimal recycling mechanism, and this will create surplus revenue and profit growth for TOMRA in certain periods
28
Addendum slide - Major shareholders*
1. Folketrygdfondet 16 886 300 9.7%
2. Orkla ASA 16 541 000 9.5%
3. State Street Bank & Client Omnibus D 5 883 103 3.4%
4. Danske Bank A/S 4 786 000 2.8%
5. Clearstream Banking CID Dept, Frankfurt 3 618 124 2.1%
6. Tomra Systems ASA 3 084 100 1.8%
7. Vital Forsikring ASA, DnB NOR Kapitalforvaltning 2 923 768 1.7%
8. JP Morgan Chase Bank Clients Treaty Account 2 458 236 1.4%
9. Skagen Vekst 2 300 000 1.3%
10. Morgan Stanley & Co. Client Equity Account 2 049 165 1.2%
SUB-TOTAL 60 529 796 34.9%
Other shareholders 113 112 068 65.1%
TOTAL (13,960 shareholders) 173 641 864 100%
Total foreign ownership 61 672 902 35.5%
*Registered 30 September 2006
29
Addendum slide - Shareholders by nationality
1. Norway 64.5% 13 165
2. Great Britain 11.9% 78
3. USA 6.3% 162
4. Denmark 4.6% 61
5. Luxembourg 3.9% 38
6. Sweden 2.0% 113
7. Switzerland 1.2% 17
8. France 0.8% 19
9. Holland 0.8% 56
10. Germany 0.6% 92
TOTAL 96.7% 13 801
*Registered 30 September 2006