TOMRA Q2 2025 presentation slides: Food division shines amid mixed results

TOMRA Systems ASA reported mixed Q2 2025 results, maintaining adjusted EBITA at €44 million year-over-year despite a slight revenue dip to €325 million and a significant decline in cash flow from operations to €17 million. The Food division was a standout performer, with revenues increasing and EBITA more than doubling due to strong order intake. Conversely, the Recycling division faced significant challenges, experiencing a sharp decline in EBITA and order intake attributed to macroeconomic factors and a soft European plastics recycling market. The Collection division saw a 12% revenue decline but maintained its EBITA margin, with future growth dependent on upcoming Deposit Return System launches. This divergent divisional performance presents a nuanced outlook despite the company's solid financial position.

Analysis

TOMRA Systems ASA's Q2 2025 results present a bifurcated performance picture, with overall stability at the adjusted EBITA level (€44 million) masking significant divergence across its business units. Total revenues saw a minor contraction to €325 million, but a more concerning signal was the 50% year-over-year decline in cash flow from operations to €17 million. The Food division was the standout performer, with revenues growing to €94 million and adjusted EBITA more than doubling to €17 million, driving margin expansion to 18% from 10% a year prior. This strength is supported by a record order intake of €106 million, a 28% increase, and a positive outlook for mid-single-digit revenue growth in 2025. Conversely, the Recycling division faced severe headwinds, with its EBITA falling to €6 million from €10 million and margins contracting to 11% due to macroeconomic weakness and a soft European plastics market, reflected in a sharp drop in order intake to €41 million. The Collection division's 12% revenue decline to €169 million is attributed to the timing of new market rollouts, though it maintained a resilient 16% EBITA margin, with future growth heavily dependent on upcoming Deposit Return System launches in Poland and other European nations. The company's financial position remains solid with a 1.8x net debt to EBITDA ratio, though interest-bearing liabilities have increased.

Key Decisions for Investors

• Investors should analyze TOMRA as a sum of its parts, as the strong secular growth and record backlog in the Food division are currently being offset by severe cyclical pressures in the Recycling segment.
• Monitor leading indicators for a turnaround, specifically the order intake and EBITA margin recovery in the Recycling division, and track the execution timeline of new large-scale Deposit Return System (DRS) projects in the Collection division.
• While the Food division's performance provides a strong foundation, the significant drop in operating cash flow and weakness in Recycling may warrant caution in the near term, suggesting a hold or disciplined entry approach pending signs of stabilization in the struggling segments.