TOMRA: 1Q26 - Strong growth in Collection and Food, profitability impacted by Recycling and short term product mix effects

The key read-through is not the top-line growth, but the widening divergence inside the portfolio. The softer recycling print implies a weaker capex cycle in industrial sorting/recovery equipment, which typically feeds through to lower aftermarket pull-through and slower utilization at adjacent suppliers with similar end-market exposure. By contrast, the collection and food franchises still appear to be carrying the group, suggesting demand is rotating toward higher-visibility, compliance- or efficiency-driven spend rather than discretionary expansion.

Gross margin compression looks more important than the revenue beat because it can signal mix and execution pressure before it shows up in operating leverage. If the margin drag is transitory, the market will likely look through it; if it persists into the next quarter, it will force multiple compression even if growth remains mid-single to low-double digit. The second-order risk is that stronger international growth may be masking FX or project-mix deterioration in the weaker business lines, which can create a false sense of earnings resilience until backlog converts.

The contrarian view is that recycling may be closer to a cyclical trough than a structural deterioration. In that case, current weakness could set up a favorable inflection trade over the next 2-4 quarters if order intake normalizes and margin recovers off a low base. The market is likely pricing the visible growth businesses too generously and the cyclical segment too harshly, which creates opportunity in relative-value expressions rather than outright directional bets.