Tomra Systems ASA (TMRAY) Q4 2022 Earnings Call Transcript

Tomra Systems ASA (OTCPK:TMRAY) Q4 2022 Earnings Conference Call February 24, 2023 2:00 AM ET

Company Participants

Georgiana Radulescu - Head, Investor Relations

Tove Andersen - Chief Executive Officer

Eva Sagemo - Chief Financial Officer

Georgiana Radulescu

Good greeting from Asker, Norway and invited to our Quarterly Results Presentation. My sanction is Georgiana Radulescu and I americium Head of Investor Relations. With maine coming I person Tove Andersen, CEO and Eva Sagemo, CFO who will return you done nan results. You will person nan opportunity to inquire questions by utilizing nan Q&A tool, which is embedded successful nan webcast. We kindly inquire you to airs your questions successful bully time, ideally during nan presentation, because location is simply a lag betwixt nan sending and nan webcast. So successful that way, we make judge we person them successful time.

With those being said, I will springiness nan connection to Tove.

Tove Andersen

Thank you, Georgiana and invited each to our 4th fourth 2022 presentation. Today, we coming nan tenth consecutive 4th pinch integrated apical statement maturation and nan 3rd consecutive 4th pinch all-time precocious revenues. Our revenues ended connected NOK3.477 million, that is up 7% nan rate adjusted versus 2021. We really had nan grounds precocious revenues successful each divisions this quarter, pinch postulation ended up connected 6%, recycling 4% and nutrient up 9%.

Our gross separator for nan 4th was 42.4% that is 1.2% beneath aforesaid 4th 2021. But this shows besides a affirmative inclination versus 3rd 4th this year. So, it’s up 1.2 percent constituent versus 3rd 4th this year. As we person antecedently communicated, we person had nan unit connected our gross margins during 2022 owed to delays successful value increases versus costs increases. On nan operating expenses, we ended connected NOK979 million, up from NOK794 cardinal aforesaid 4th 2021.

At Capital Markets Day past year, we presented nan updated strategy wherever we show that we person eager targets some connected expanding gross and improving our profitability. And we are investing successful our business and operations successful bid to meet these targets. This gave them an EBITDA of NOK496 million, down from NOK535 cardinal past year. Cash travel from operations ended up connected NOK350 million, nan main reasons down nan reduced rate travel were successful nan 4th for this twelvemonth versus past twelvemonth is linked to moving capital. We had very precocious activity level successful nan 4th and besides particularly astatine nan extremity of 4th quarter. And that is nan main logic for increases than successful accounts payable and accounts receivable.

Our bid intake successful nan 4th was NOK1.5 cardinal mixed for nutrient and recycling, this is up 17% versus nan aforesaid 4th successful 2021. Especially bully capacity successful recycling successful nan 4th and location is besides immoderate affirmative rate effect successful there. This gave america them a patient bid backlog ended past twelvemonth complete a spot much than NOK2 billion. And this has done up 17% of wherever we started 2022 and position america very good for further maturation successful 2023.

As antecedently commented upon, costs ostentation has continued to beryllium a unit point, particularly successful postulation wherever we person communicated antecedently that owed to framework agreements location is simply a timeline. It will return immoderate clip earlier we are backmost astatine normalized levels. However, this has continued attraction from nan statement and successful summation to value increases we person costs simplification initiatives moving successful each 3 divisions. On dividend, nan Board proposes an mean dividend of NOK1.8 per stock that is an up 9% versus nan mean dividend that we gave retired successful 2021 and it’s successful statement pinch our dividend policy.

Then let’s move complete to business updates and we will commencement pinch nan collection. As I already mentioned, postulation had an all-time precocious quarterly revenues successful nan 4th of almost NOK1.7 billion. The cardinal contributors to that, was accrued income into Romania and nan Netherlands. In Romania, nan retailers are preparing for nan deposit strategy that will spell unrecorded successful November 2023 and arsenic antecedently communicated 2nd half of 2022, we had income of astir NOK150 million. In nan Netherlands, nan retailers are preparing for nan tin deposit extension, which from nan debased was past approved from January 1 this year, but arsenic we expect to beryllium operationally successful April this year. We had astir NOK100 cardinal successful income Q4 for nan Netherlands.

Another item successful nan 4th was that we signed a Letter of Intent pinch nan Mall Group who has been appointed nan discarded concessionaire successful Hungary for their upcoming deposit strategy successful Hungary. So that will return effect from opening 2024 and our Letter of Intent covers past proviso of astir 2,000 to 2,500 machines into Hungary. The pictures you spot present are pictures of what we will motorboat astatine nan EuroShop, which will commencement this play and return spot this week and nan adjacent week. EuroShop is nan large world unit waste and acquisition adjacent that takes spot successful Berlin. And what we will showcase location is really early versions of immoderate of our machines. I deliberation you tin spot from nan pictures present that this looks rather different from nan emblematic reversing vending machines we person had successful nan past. And I americium very excited to spot nan guidance of what we are launching there.

Several things that we are launching little near here, you will spot nan caller type of our multi-feed machine, precocious correct you will spot a caller backroom solution wherever we are utilizing nan tallness of nan abstraction successful nan refillers to prevention level space. We will besides location showcase caller integer applications and work concepts. Innovation is cardinal for us. It is cardinal for delivering connected nan growth, but besides to support marketplace stock and to support nan separator level and we person really stepped up successful this area astatine nan past period. On nan correct manus side, you will spot nan updated database connected countries that person a patient determination connected going up pinch a deposit return scheme. There are not immoderate large updates connected that versus erstwhile quarters. I will not spell done it successful detail. But if you look astatine each nan ones isolated from nan Austria connected this database will spell unrecorded past either 2023 aliases early 2024.

Let’s past move into recycling. Recycling had a very bully 4th successful Q4 2022 pinch all-time precocious gross and all-time precocious bid intake. And arsenic shown connected nan chart here, nan bid intake were up 23% versus past year. We are seeing bully request from each regions and each segments that we are operating in. And past besides if you look astatine nan full twelvemonth of 2022, it has been a really bully twelvemonth for our recycling division. The section has delivered a maturation of 26% successful 2022 and besides they person delivered a coagulated bid backlog of NOK965 million, which is up 37% compared to wherever we ended past year. And I americium very happy pinch nan capacity of nan recycling divisions. These things does not hap by itself, it takes a batch of effort to really turn astatine these paces. We do judge going guardant it will spell backmost to a spot much normalized request levels. We spot that nan commodity prices person been reduced somewhat and besides arsenic illustrated present pinch nan PET prices going down, however, it’s bully to spot still important separator connected recycled PET versus virgin PET. However, this doesn’t alteration nan underlying drivers and nan underlying drivers successful nan recycling section it is accrued request for recycled contented owed to accrued attraction connected sustainability and it is legislative unit and that will proceed to thrust nan request going guardant successful this segment.

Then complete to nan Food business, Food delivered a beardown 4th Q4 2022 pinch a maturation of 9% rate adjusted and besides accrued margins chiefly owed to volume, merchandise and customer mix. As shown here, our bid return successful nan 4th was up 14% compared to Q4 2021. We had bully bid capacity successful processed food, truthful processed nutrient was particularly bully successful nan quarter, while connected caller food, nan bid intake was beneath past 4th aforesaid twelvemonth chiefly owed to bad harvest of definite categories, definite caller nutrient categories. Overall, nan marketplace sentiment successful nutrient is bully for processed food, but we do spot immoderate signs of weaknesses for nan caller nutrient segment.

As we are presenting Q4, it’s a bully clip to bespeak a spot connected 2022 and I wanted to springiness you immoderate highlights connected nan advancement that we person made successful nan translator of our nutrient business focusing connected portfolio, marketplace and expertise. On nan portfolio side, arsenic galore of you know, our nutrient business is nan consequence of 4 awesome acquisitions and pinch 4 awesome acquisitions you besides past get a bequest portfolio. What we person focused connected successful 2022 is really to consolidate that portfolio, streamline it and besides align our invention roadmaps and amended our lifecycle management. This is progressing well, but these products person typically a life expectancy of much than 10 years. So, this is nan activity that to beryllium afloat implemented will return immoderate time. Another point we person done connected nan portfolio is to do co-development of integrated solutions. And 1 illustration of that is our practice pinch Murrell, wherever we person launched Spectra, which is for nan poultry segment, successful statement inspections, each poultry that could past beryllium sold arsenic a portion of nan Murrell solution for that segment.

On nan marketplace side, portion of our strategy is to turn successful definite regions by leveraging past competence from different regions, which has been progressing successful 2022. Last quarter, we talked astir [indiscernible], which is nan partner and 1 of nan partners that we person chosen to meet nan request for integrated solutions by selected successful definite customer segments. Another point we are doing wherever we are successful nan mediate of doing it now is that we are changing our go-to-market attack successful caller nutrient for Europe and Latin America. So, what we are doing location is that we are changing from going done a supplier to ourselves spell nonstop to customers some for income and work and we judge that is important aliases an important enabler for thrust further growth.

On nan expertise side, we person done galore different things successful 2022, but to mention a mates of things. Category guidance is cardinal successful food. We person gone from being a much accepted income unit focusing connected instrumentality really beryllium a customer-centric income unit and successful nutrient that intends that you attraction connected nan categories that you are applying into. So we person strengthened our class guidance and competence, but besides we person worked connected streamlining our customer-centric backmost agency business processes. Again, we travel from 4 different companies. And we person been moving now connected streamlining those to summation gross is accrued little sales, accrued customer satisfaction, but besides accrued service. And 1 actual point we are done location is conscionable earlier Christmas we launched our caller CRM system, customer narration guidance strategy successful nan nutrient division. So overall, we are seeing bully advancement successful nan translator of nutrient successful 2022.

And we are past progressing successful statement pinch our strategy plan. But arsenic we presented arsenic nan Capital Markets Day, our strategy is not only astir accelerating maturation successful core, but it’s besides astir processing adjacent opportunities. So besides I want to opportunity a fewer words astir adjacent opportunities. But first, I past wanted to recap what is this really about. So processing adjacent opportunities is astir taking our 50 years of experience, nan exertion know-how we have, nan relationships we person successful nan worth concatenation to past create caller important business opportunities that tin go a 4th aliases 5th limb of Tomra. They each request to beryllium ripe for scaling. So, it’s not astir R&D, it’s really astir building businesses and they each request to beryllium nether nan heading of starring nan assets revolution. Today, we person 3 of these initiatives running. We person 1 connected closing nan loop connected textiles. We person 1 connected processing reuse concepts for takeaway and we person 1 which is nan integrative feedstock initiative. And connected nan integrative feedstock initiative, we past launched aliases approved and communicated a caller important finance into that initiative.

So, what we communicated is that we will build an precocious sorting works to past alteration closing nan loop connected plastic. What does this practically mean? It intends that we will bargain mixed integrative fractions from worldly betterment facilities, this is family waste, mixed plastic, soiled plastic, we will use precocious exertion best-in-class sorting and washing to really move it into 10 high-quality polymers that we will waste to nan recyclers. The finance will beryllium astir NOK50 cardinal to NOK60 million. It should beryllium operational by NOK24 cardinal to NOK25 cardinal located successful Germany pinch a capacity of 80,000 tons.

But nan mobility mightiness beryllium past why is Tomra doing this? And nan logic why we are doing this it is because location is simply a important business opportunity present wherever we person nan correct to it. If you look astatine today, nan early request for integrative is particularly benignant of difficult to get integrative that is not being recycled today. If you look astatine nan legislation, location is simply a important spread successful nan market, nan request is there. And if you look astatine what is presently happening pinch plastic, you person 24 cardinal tons of integrative going into incineration, 14 cardinal tons going connected landfill successful Europe. So you person nan earthy material, but to really correct person that earthy material, till a precocious worth integrative that tin beryllium recycled, nan cardinal point to unlock that is nan sorting capability. And that is what Tomra is bully at. So we judge that this represents a bully business opportunity for Tomra, wherever we pinch our competence and knowledge tin really unlock a caller information loop wrong plastics recycling. So, we are very excited astir this investment.

With that, I will past manus complete to Eva who will coming nan financials and outlook.

Eva Sagemo

Thank you for that, Tove. So starting pinch nan group, nan P&L for nan 4th and we person each clip precocious revenues up 7% rate adjusted compared to them aforesaid 4th past year. All business divisions delivered a beardown Q4 apical statement collection, up 6%, recycling, up 4% and food, beardown up 9% rate adjusted for nan quarter.

Gross margins ended astatine 42%, which is nan 1.2 percent constituent down compared to aforesaid 4th past year. And arsenic Tove mentioned, ostentation is still impacting nan separator negative, but besides this 4th we person had affirmative effect coming from measurement and mix, particularly done successful food. Looking astatine nan gross margin, we person nary awesome effect coming from rate little than 0.5 percent constituent for nan group successful nan quarter.

OpEx operating expenses is up 18% rate adjusted for nan 4th and we are investing arsenic Tove mentioned successful nan commencement successful business maturation successful recycling, but besides ramping up successful postulation for caller marketplace and past nan business translator task successful food. The OpEx run-rate complete gross is astatine 28% for nan quarter. EBITDA ended astatine NOK496 million, which leaves EBITDA percent astatine 14% for nan quarter.

Quickly connected nan afloat year, we are up 8% rate adjusted ending astatine NOK12.188 cardinal for nan twelvemonth and past pinch EBITDA astatine NOK1.625 cardinal leaving EBITDA separator astatine 13.3%. Collection, we had nan grounds precocious revenues successful nan quarter, up 6% pinch besides precocious comparables from past year. The Nordic countries continued to execute good. We had unchangeable existing markets successful Europe, but we had revenues from Romania astatine astir NOK150 cardinal for nan 2nd half of nan year. And past successful nan Netherlands, pinch ramping up for nan existent implementation, we had astir NOK100 cardinal coming from that state successful nan quarter.

Looking astatine nan margin, gross publication margin, we were astatine 37%, which is 2.5 percent points down compared to aforesaid 4th past year. And astir of that is simply a consequence of nan lagging value increases owed to these semipermanent framework agreements successful collection. And nan remainder is coming from unfavorable operation this quarter. In postulation we person very constricted rate effect connected nan gross margin.

Operating expenses is up 8% curacy adjusted. And they're looking astatine nan afloat twelvemonth we are up 6% connected OpEx that compared to an summation successful revenues of 4% for nan afloat year. So we are continuing to investing successful ramp up successful caller markets, which explains nan other summation successful nan operating expenses for nan year. EBITDA nether NOK246 million, which is which gives america an EBITDA astatine 15%.

Then looking astatine nan Recycling, each clip precocious gross besides here, up 4% rate adjusted connected besides precocious comparables from aforesaid 4th past year. And this 4th Americas were particularly beardown up 54% compared to aforesaid 4th past year, gross publication separator astatine 51%, which is down 3 percent points compared to aforesaid 4th past year, chiefly explained by inflation, but besides immoderate related to operation effect. Operating expenses is up 24% this 4th compared to aforesaid 4th past year. But looking astatine nan afloat twelvemonth we nether astatine 20% summation successful OpEx pinch a gross maturation of 26%. So OpEx is increasing successful statement aliases little arsenic gross growth. EBITDA astatine NOK141 cardinal pinch an EBITDA separator of 21%.

Down looking astatine nan bid cites, bid intake, we had an bid intake maturation of 23% for nan 4th compared to aforesaid 4th past year. Carriers adjusted we were up 18%. That leaves america a beardown bid backlog up 37% year-over-year, nan rate adjusted up 32%. So our bid backlog ended astatine NOK965 cardinal sound successful recycling. And our estimate which is not nan guiding but an estimate they're going into nan adjacent quarter. So Q1 ‘23 we estimate a conversion ratio of that backlog astatine 65%.

And past food, we besides present had each clip precocious revenues ups 9%. So beardown capacity some successful Europe but besides successful America, Europe are up 82% and Americas were up 33%. We person immoderate setbacks successful Asia aliases that region APAC region owed to bad upwind information erstwhile quarters, but besides this 4th arsenic Tove mentioned. The margin, gross separator nether that 45% which is up 2.5 percent points compared to aforesaid 4th past year. And arsenic I said, we person a bully affirmative effect coming from measurement and mixed, but besides immoderate from rate 0.5 percent points connected currency.

The operating expenses successful nutrient is – has grown has grown astatine 60 – nan 26% this quarter. And if you look astatine it for a afloat year, we are up 12% connected a gross maturation astatine 5%. And nan precocious tally complaint successful operating expenses successful nutrient is related to oneness nan business description and past we person nan translator task which Tove talked about. And past we besides are coming much backmost to normalize activity levels aft COVID. And arsenic you know, nan APAC region has been – for – has had a longer lockdown than nan remainder of nan world, particularly Europe and America's.

EBITDA ended astatine NOK157 cardinal which leaves america an EBITDA separator astatine 14%. Then looking astatine nan bid image for nutrient bid intake astatine 14% growth, compared to aforesaid 4th past year. Currency adjusted we are up 4%. On nan backlog we ended astatine NOK1.83 cardinal which is up 4% but down adjacent to 6% presently adjusted. And arsenic Tove mentioned, we are seeing immoderate – truthful processed nutrient is very beardown while caller nutrient is suffering a spot from that upwind information successful portion of nan world. In food, we person estimated a conversion ratio of 60% of nan bid backlog of NOK1.83 for nan adjacent quarter, truthful first 4th 2023.

Then looking astatine nan equilibrium expanse and nan rate flow, our equilibrium expanse has grown year-over-year 20% rate adjusted we were up 15%. We person been allowing for higher inventory levels successful 2022. And we person seen that quarter-over-quarter, truthful we person consciously been building up information banal to beryllium capable to present to nan market. And we person besides planned for caller machines going into caller markets and particularly successful collection. We besides had a beardown 4th connected revenues, and particularly past successful December, which past gives them a bully summation successful nan accounts receivable year-over-year. We person besides done immoderate investments this twelvemonth to mention immoderate is 1 point is nan throughput marketplace successful Latvia, wherever we took immoderate of nan finance past twelvemonth but past continued a spot into 2022. And besides did this week suffer betwixt inventory and tangible assets. And we person besides invested successful U.S. but besides successful Australia wherever we person group up caller postulation points according to our statement successful New South Wales. And past we person besides accrued our correct of usage assets related to buildings successful existing markets.

Looking astatine nan rate travel from operations, we are astatine a NOK350 cardinal successful nan quarter, down from aforesaid 4th past year. We are besides down for nan afloat year. And arsenic I mentioned, it's owed to nan antagonistic moving superior effect wherever that has been expanding this year. And besides that we person little profits compared to 2021. Our equity ended astatine 47% and our gearing astatine 1.2. And arsenic Tove mentioned successful nan opening we person done a connection from nan Board to salary retired an mean dividend of NOK1.8 per share, which is past 52% of nan EPS for nan twelvemonth and successful statement pinch our dividend policy.

So arsenic I said we person been consciously allowing for higher moving superior level this year. But we are targeting little levels going into 2023. We person utilized our beardown equilibrium expanse to beryllium capable to present to nan marketplace to hole for caller markets but besides to proceed to put successful early business. And Tomra, we judge it is important to support bully superior discipline, arsenic we will proceed to put successful R&D, early business opportunities and allowing for dividends besides successful years to come. On nan financial position, our weighted mean indebtedness maturity astatine 3.1 years, extremity of nan year. And we person besides unused in installments lines of much than NOK1 billion. We besides person elder unsecured bonds of NOK1.6 cardinal listed astatine Oslo Stock Exchange wherever we person greenish bonds of a information of NOK1 billion.

Just to summarize connected nan rate arsenic you tin spot from nan graph, we person a U.S. NOK which is up 16.8% for nan 4th and euro NOK which is up 4.2% for nan quarter. And these effects springiness affirmative effects connected Tomra’s capacity arsenic mentioned. The P&L is up 7% connected nan revenues, we person a flimsy affirmative – somewhat affirmative effect connected nan gross separator and nan EBITDA separator for nan 4th astatine 0.5% aliases moreover little than 0.5%. And past for nan afloat twelvemonth our gross is astatine 4% affirmative effects from rate and gross separator astatine 0.5%. And EBITDA adjacent to 1 percent constituent for nan afloat year. And we will proceed to beryllium exposed to rate arsenic nan astir of our transactions some successful our P&L but besides successful our equilibrium expanse is successful Euro and U.S. dollar and Australian dollar.

Then looking astatine outlook. Starting pinch collection, we expect precocious activity related to mentation for caller markets. And to mention immoderate we are successful nan mediate of nan description for nan Netherlands for tin implementation. And we expect that to proceed into Q1 astatine much aliases little nan aforesaid levels, arsenic we person seen successful nan – this 4th quarter. Scotland is going unrecorded successful August this year, we person Romania, commencing successful November, and past Hungary successful January 2024. And past to mention immoderate others that that will besides spell unrecorded soon is Ireland successful February 24. And past we person Quebec and nan remaining states successful Australia, that will travel during nan fall. But of course, nan quarterly capacity will dangle upon nan timing of these caller markets. And arsenic we person said before, it's nan different markets that run differently. So that tin alteration successful nan gait for nan different markets preparation.

Then moving connected to – and then, yes, possibly I tin mention besides connected nan gross separator and collection, because that has been rather a unit constituent this year, we expect besides nan gross separator to gradually amended passim nan twelvemonth and going into 2024. And past erstwhile it comes to ramp up for caller markets, truthful we person a tally complaint for 2022 astatine astir NOK200 million. And we expect that level to proceed astatine nan aforesaid – astatine nan NOK200 cardinal mark. But we will travel backmost pinch much accusation if that will change.

Then moving connected to recycling, nan pipeline successful recycling looks promising. And nan affirmative momentum is assumed to proceed but normalized towards much from nan precocious levels that we person seen now successful 2022. The request for recycled worldly is expected to create opportunities and nan information system is still an important driver successful this business. In summation to besides commodity prices, but we spot that legislation, nan manufacture and besides customer anticipation is driving nan request for recycled materials.

Then looking into food, short-term, we spot nan request successful nutrient arsenic much stable. But again, without uncertainty nan request for optimization creates opportunities, nan mid and semipermanent and to mention immoderate it’s precocious labour costs, but besides nutrient information that we person to person much retired location to produce, but besides taking attraction of nutrient discarded successful production. And past connected nan costs side, truthful costs ostentation will proceed to beryllium a unit point. But we are taking pricing actions and costs measured. And we expect that to mitigate nan proviso concatenation and ostentation effect going forward. We don't expect nan costs to increase. But we don't needfully spot an importantly driblet currently. Except for nan elevated freight costs that is expected to move towards much normalized levels. And we spot that already.

Then erstwhile it comes to nan bottlenecks that we person had successful sourcing caller shortages and besides connected nan logistical side, we expect that to besides easiness up and we don't expect to bargain successful nan spot astatine importantly values successful 2023. And past nan past point which is important is connected nan rate and arsenic I mentioned, we are exposed particularly to euro and U.S. dollar. And that will person an effect going guardant arsenic good successful early quarters.

And pinch that, we tin commencement nan Q&A session.

Question-and-Answer Session

Operator

A - Georgiana Radulescu

Thank you, Eva. And first of each apologies everyone if you person knowledgeable interruptions successful nan webcast. The signaling will beryllium uploaded connected our website soon aft nan sending. We person a fewer questions that person travel in. The first 1 is from Elliott astatine Nordea. Can you remark further connected nan gross EBITDA margins? Do you expect Q4 to beryllium nan debased constituent aliases do you deliberation these levels could proceed passim nan first half of 2023?

Eva Sagemo

Yes. So we ended nan twelvemonth astatine nan 13.3 and nan past quarter, 4th fourth astatine 14.3. And pinch nan bully momentum and postulation and nan costs nan measures that we are taking to power costs but besides taking nan value increases into information and bully momentum successful nan recycling. We expect to beryllium capable to assistance nan margins going forward, but can't committedness thing successful Q1 of this twelvemonth already.

Georgiana Radulescu

Thank you, Eva. The adjacent mobility is from Marcus [indiscernible] astatine ACB. Can you please supply spirit of really delicate economics of nan sorting works will beryllium to virgin and discarded material? What value levels will you require?

Eva Sagemo

Yes, truthful I presume this is linked to our feedstock inaugural and finance successful nan feedstock attraction plant. So this is simply a spot of an unchartered territory, because what we will do present is that we will bargain thing that is seen arsenic a discarded coming and we will waste into qualities that location is not an existing commodity marketplace for currently, we person been successful speech some connected nan proviso broadside and nan – truthful some connected nan sourcing broadside and connected nan customer side. And erstwhile we consciousness that location is some bully readiness of earthy materials into nan plant, but besides we spot important liking and request from customers to acquisition nan worldly that we are getting out. So we are comfortable pinch nan discussions that we person had that that will create a bully profitability for this business.

Georgiana Radulescu

Thank you. The adjacent mobility is from Elliott astatine Nordea. Could you supply immoderate item connected really overmuch of nan OpEx is related to information system future-oriented cost?

Eva Sagemo

Yes. So successful this year, arsenic besides arsenic erstwhile years, we person – we put astir 8% to 10% of nan gross into early oriented cost. And we don't needfully break it into nan different buckets. But what we pass is that we person nan ramp up costing successful postulation astatine NOK200 cardinal and past we person an R&D investments are costs astatine levels betwixt – yes, 4% to 5% of nan revenues. And past nan remainder is wrong different early oriented activities successful Tomra.

Georgiana Radulescu

Thank you. Do you expect nan UK opportunity to supply immoderate revenues astatine each successful 2023? Also from Elliott from Nordea.

Eva Sagemo

Yes, truthful if you look astatine nan UK, truthful arsenic we person shown connected nan successful nan presentation, Scotland will spell unrecorded pinch a deposit strategy successful August. So we do expect effect from income into Scotland this year. If you look astatine nan remainder of nan UK, UK conscionable communicated nan consequence of their consultation pinch an denotation aliases go-live precocious 2025 pinch nan deposit scheme. So for nan remainder of nan UK, I don't expect a important effect connected income successful 2023. However, nan Republic of Ireland is going unrecorded successful February 2024. And we expect effect from income into Republic of Ireland this year.

Georgiana Radulescu

Thank you. The adjacent mobility is from Daniel Haugland astatine ABG. Hi, you said gross separator is expected to gradually amended passim nan twelvemonth and into 2024. What benignant of levels are you targeting to get backmost to successful 2024? Historically, it has been astatine 40% to 42%.

Eva Sagemo

Yes. It is uncertain, because we request to besides win connected nan levering truthful expanding our prices and besides taking their costs – and besides person a occurrence connected nan costs initiatives that we are moving successful Tomra. So I'm not – I don't want to spell into specifications what we expect for nan – for this twelvemonth and past going into 2024. But we are optimistic successful bid to summation nan gross separator into towards nan extremity of this year. And past we request to retrieve that we person this semipermanent ambition of having EBITDA level astatine 18%. So we still person immoderate years to present connected that profit target.

Georgiana Radulescu

Thank you. And pinch that we person nary further questions. So convey you everyone for listening successful and spot you adjacent time.