Tomra Systems ASA (TOM) Earnings Call Transcript & Summary

Good morning, and welcome to our Capital Markets Day 2022. We are here in our recycling headquarters in Mülheim-Kärlich, Germany. And I would also like to say a big welcome to our digital audience following us via the web. Thank you for being with us today. My name is Georgiana Radulescu. I'm heading Investor Relations here at TOMRA. We have prepared an exciting day for all of you. The first part of the day will be a presentation session I will talk more about that. We will have a strategy update, and we will present to you our future ambitions. For the second part of the day, we will go on a test center tour, where you will see a demonstration of 4 different material types. After that we will go on a field trip to our demo plant for advanced mechanical recycling that we have set up in cooperation with Borealis early last year. The agenda for the first part of the day is split into 2 blocks. For the first block, you will here from Tove, after which each division will present their strategies and path going forward. Unfortunately, Michel Picandet, the Head of Food was no longer able to be with us today due to unforeseen personal reasons. So Tove will take you through the strategy update for Food. We will have the first Q&A session at 9:45 a.m., and we have intended it for division questions. We will take questions both from the hall here. So for the audience here, please raise your hand, and my colleagues will be with you with the microphone. We will also take questions from the web. So we kindly ask you to ask your questions in advance because there is always a small lag between the live presentation here and the webcast sending. We will take a break at 10:30 a.m., and we will be back at 11:00 a.m. After the break, we will discuss our corporate strategy with Tove Andersen and Eva Sagemo. And that will be followed by a Q&A, which starts at 11:00 a.m. and ends at 11:30 a.m. Some housekeeping rules for everyone here. The event is live streamed. So please let our team know if you do not wish to be filmed or photographed. The restrooms are on the right side, by the entrance. No photos here or doing the full trip in a lunch time. There are designated smoking areas. Please ask my colleagues. Do not touch the machinery. There are many moving parts there. And also, please do not wander around in the TOMRA campus because they might be heavy machinery in motion, and we want you to be safe. The emergency exits are located behind you by the. Entrance And please do not hesitate to get in touch with my colleagues if you have any questions. Those being said, we will start by watching a short movie before welcoming on stage Tove Andersen, President and CEO. [Presentation]

[Audio Gap] is not sustainable. It needs to change. And in TOMRA, we want to play a proactive role in changing that. Our vision is to lead [Audio Gap] impact us in China. It's also been a period with rising inflation, the sad invasion of Ukraine of Russia, supply chain disruptions and so forth. But these short-term challenges, which [Audio Gap] we are the leading player, and that is across all the divisions. We have the best-in-class technology, and that is, of course, one of the reasons why we are a leading player, but also that we have 50 years of know-how that we can advise the customers, that we can have a good service for the customers to ensure that they can operate continuously. And we have purpose-driven employees. Now we are 4,600 purpose-driven employees. The strong culture and that, I guess, is what has impressed me the most since I joined the company. We can do [indiscernible] people. There is no problem that we can solve when we were together and that we do. So this has then created this position where we believe that we are really perfectly positioned to then leverage the global mega trends that are accelerating around us. So today, we are presenting to you an ambitious strategy where we will accelerate growth in our core businesses, and we will develop adjacent opportunities. So let's then start on the first part, and talk about or what is going to be our own map to accelerate growth in the core. And we will start with the collection business. [Presentation]

Hello, everyone. Good morning. I'm Harald Henriksen, Heading our Collection. I have a few topics I want to cover today. First, some facts on the business. Then our growth drivers. I will talk about legislation, also our go-to-market strategy. I'll also touch upon competitors, innovation, as you are all nodding. The right agenda. Also supply chain due to the sort of issues we have globally now, I'll touch upon that, and then I will end with our big [indiscernible] goal. And I have less than 20 minutes. So please note your questions, and then we'll take it in the Q&A afterwards. So I'll just start with some facts, and this is sort of the current situation that we are in around 60 markets. We have around 70% market share, probably around 70% on number of machines, and maybe a bit more than 70% on the revenue, [indiscernible] revenue per machine. 81,000 machines globally in the markets, close to NOK 6 billion in revenue. And then we collect 43.6 billion containers through our machines every year. And we have sort of real-time numbers on that because 80% of our machines are connected to the cloud, and then we have that information. And it, of course, increases every year. 43.6 billion is less than 3% of what is being sold on beverage containers every year, and that shows the potential we have. And that's actually the number we like to refer to instead of talking about the number of machines. It's all about the number of bottles, which is available. So growth drivers. The biggest growth driver for us is legislation. And our ability also through our public affairs team to actually both influence and consult with the government all over to be able to put in place the best practice, best possible, most efficient type of deposit scheme. That's number 1 on the drivers. Number 2 is, as I said, we have 81,000 machines out in the market. That's an asset to us. Those machines will be replaced, and they are being replaced after 7 years, 8 years, 10 years, some of you have the machine in 20 years. But what we see is that innovation coming with new innovative products is a trigger to generate demand in the market, and trigger replacement. So that's definitely one of the big drivers as well. It's probably more important to come with new technology in existing markets instead of in new markets because in new markets, we have a competitive portfolio anyway. So that's sort of part of the growth drivers. The third one which is not mentioned here is also when we enter new markets, we talked to a lot of stakeholders, customers, we see the opportunity to also generate business in a bigger part of the value chain. One example is in Australia, where we are running the whole IT backbone of the system -- deposit system in New South Wales. So we see all these opportunities also when we go into new markets. So on legislation and new opportunities today, I said we are in 60 markets. There are actually 40 one-way deposit markets globally and then around 20, which have voluntary refillable schemes, and we work in all of those. And what we see now, as I said, the biggest driver is new markets, but it's also modernization and improvement of the existing markets because there are actually several markets where the deposit scheme is not as efficient as it should be. California is an example. We have no business in California, yet. So a lot of improvement has to be done there. Examples here are Connecticut in the U.S., where they have decided to modernize the system, handling fees are being increased. More beverage categories are included into the system. And in 2024, the deposit value will be doubled from [ NOK 0.05 to NOK 0.10. ] And that will seriously improve that deposit system and the performance of it. Quebec, in Canada, have decided to modernize their system. All the sort of regulations and details are not ready, but we expect that it will be more beverage categories, increasing handling fee, much clearer collection targets and also a doubling of the deposit value in Quebec. Then we have new markets like Latin America. We expect Uruguay to be the first 1 way, deposit market Latin America. We already have a couple of thousand machines in Latin America, but that's through a distributor on more affillable type of schemes. We expect Singapore to be the first deposit market in Asia. And many countries look at Singapore. So that will be extremely important for us. We have moved our Asian headquarter -- collection headquarter from China to Singapore. Just a few weeks ago, we have also managed to get the Ministry of Environment in Singapore to travel together with us to New South was to have a look at our setup there. So we have already a lot of good connections in Singapore. Then we -- well, it's not -- we know that Australia will actually be the first deposit continent. It's only 2 states left, it's Victoria and Tasmania. It's ongoing tender processes in both of those states now. And Victoria will go live in July next year, Tasmania and something similar. And that will be the first continent with deposits in all states. And then things are also moving forward in New Zealand. But Europe is probably the most important market right now. So I'll zoom into that. In Europe, only 10 out of the 27 European Union states have deposit. So around 1/3 of the population in European Union today can use a deposit scheme, and we expect that over the next 5 years, another 1/3 of the population will be able to use the scheme in addition to U.K. We also expect, and we see there are movement in Serbia and in Turkey. So a lot going on in Europe base. And this is all based on the single-use plastic directive and the target set by the European Union. So very exciting times in Europe. So if we talk about our sort of go-to-market strategy in Europe -- and actually in most countries, when we talk about new markets, we always want to go into the market early, not too early because that will be too costly, but not too late. So it's sort of a timing issue. But we want to be in a market with our own people as early as possible to be able to build relationships with stakeholders, customers, set up partnerships, really learn the market. I referenced Singapore, and that's the kind of approach we want to have in all markets. So what you see on this map with the TOMRA logo is actually where we have our own offices. We have distributors, but we always want to have their own office when deposit is being introduced. So we have people, and we have set up -- probably worldwide, we have set up close to 10 companies over the last 12 to 15 months in the markets, which will implement deposit over the next few years. Competitor set up. We believe that we have a very strong position. This slide of -- what you see on the right-hand side, I think I probably used for many, many years. It's probably the same. I started in 2004. It wasn't that different at that time. Maybe some changes on the names of the competition, but it has looked like this. So it's not really a big change on the competitive setup. We have always also had a few startups, small family-owned companies starting up in different countries, some disruptive companies. And that's probably increasing now. We see a lot of more start-ups, but we are following that very closely. So our sort of, let's say, key elements of keeping this position is that we have long-term relationships with all the big retailers. And that, of course, is extremely important for us, a trust-based relationship with the customers. Then we have a service network. I said also that we like to have our own companies, and that means also that we like to have our own service technicians. And that's something that our customers really value. It's not third party, it's TOMRA-hired people. As an industry leader, of course, we will always and should always be the innovation champion. We Should always be the one innovating the technology, the way we also innovate the market with leading technology and leading solutions, and that's important for us. And we have a solutions portfolio, meaning we have modularized products, which we can adapt to the different market needs. And that's important when you lot of new markets because no market is similar. There are always differences between them where we need to adapt. So if we look into our innovation strategy. It's always based on customer centricity, and the ability to generate a good experience for our customers. And number 1 is, as I said, experience is a great recycling experience for the user of the machine or the consumer. So that's important for to think about. And you will get the demo this 1 product in the break later today at 10:00 a.m. Also, for the retailer or the customer buying the machine, it should be something which is very efficient so that the customer can have the peace of mind of knowing that they bought the right product. It's accurate. It's secure. It's efficient. It has an efficient service network. It has digital products, which the retail store owner -- or the retail chain owner can use to make sure that the whole fleet of machines are running perfectly. So all of these things are really valued by the customers. And then, of course, we want it to be a smart investment. We want the customer to know that this is a smart investment for the future. It's a machine which is prepared for future changes in the market. It's a system where with retailers, they are all digitalizing their systems now. There's a journey going on. We have developed a lot of what we call APIs, making it possible for the customer to integrate their digital ecosystem into ours, loyalty cards and stuff like that. So it's very, very adaptable for the future. And this is a good example. I think this machine, which you will see a demo also is answering on all of these 3 elements and definitely a great recycling experience. Customers are driving past many other stores to get to a store where they have this machine. We have this machine now in 8 countries. We started in Nordic countries where we have sold -- now a few hundred machines. I've talked to some of the users, the consumers, and the feedback I get, the only problem with the machine is that it didn't come several years ago. So they really love it. And we see up to 300% increase in return volumes. [Audio Gap]

[Audio Gap] we are the leading player, and that is across all the divisions, and typical investments will be seasonal. There are regional differences, and that's why you also will see cyclical investments into sectors. If you then look at the market and you look at the graph here, North America, Europe and North Oceania are the mature market. And the bubbles you see here represent the size of the market and the white bubble, the level of [indiscernible] So you will see in North America, Europe and Oceania is the mature market with high penetration of automation. If you look at our sales, approximately 80% of our sales are in that region. But even if that region is mature, it doesn't mean that there isn't potential for further growth there. There is still quite a bit of replacement happening, but also for new technologies and there are new solutions being developed, a large market that is very ready and very fast can adopt those kind of new technologies and driving growth. Latin America and South Africa is the smallest region, and also with a fairly fragmented customer picture. You will have some really large professional customers there with high automation, but also you have many small players. But it represent an opportunity for growing in the future. Asia, the biggest region, but with a very low penetration on automation. And actually, the automation there as well is at the very kind of -- is at a lower level, simple kind of sorting requirements, and not really the segments that we are operating in. But of course, when we look medium to long term, Asia represent a significant growth opportunities in our Food segment. So why automate? I think people also think about automation, it's all about cost and labor, but it's much -- but it's about much more than that. In this sector, food safety is extremely important. These brand owners, the pack houses, the food processor wants to ensure that what we get and what we buy in the store doesn't have any contaminants. Then have advanced sorting can be a guarantee to ensure that, that is not happening. Quality improvement is another key driver. If you do so, what is alternative often, it is manual sorting. But if you really want to have a consistent quality. And the big brand owners, that is a big thing. They put the fruit in the grocery store with their brand on. They want to ensure consistent quality. If you try to do that with manual labor, it's very difficult. And of course, our sorters can also identify things that people would not be able to identify. For example, our sensors can read the sweetness or estimate the sweetness of an orange. Yield increase. Important, of course, for our customers. So when you then get the fruit or vegetable into pack house, you can then sort it into different qualities, in a very accurate way to ensure that you optimize, also based on market. So these packages houses will change this every day based on what they can sell things that to really optimize how they sort their food and vegetables, so they can maximize the profit for the pack house. But also at the same time, they will then reduce the food waste. Then you have the more known drivers as access to labor and costs. Cost savings is, of course, mainly driven by labor savings, but it could also be energy savings. And also what we see now with or labor. Automation is not only about cost reduction, when you talk about labor, it's just to be able to get access to labor, which is a challenge. Well, when you automate, you know that you will be able to run your packhouse or processing unit every day. when you need it. And then we have this with minimizing food waste. Today, that is probably not the key driver for decision. But over time, all of the customers, also in this area, do you have their sustainability targets, will work on minimizing their environmental footprint, and automation will be a part of that journey. There are many reasons for why automate. But why should I then choose TOMRA? Why do they choose us? It is linked to our know-how that we have a deep platforms that I will come back to. It is about the technology. We do have best-in-class technology in all the core categories that we focus on. And we are now also adding on digital insights into that technology. And we have -- and I think that's a bit unique with TOMRA as well is that we have this local presence, local knowledge, but we are a global company. In the Food segment, we are selling into 80 countries. So we can combine this local presence and the local knowledge with global know-how. In food, we focus on categories. Because at the end of the day, all the categories have different needs. When Michel joined TOMRA beginning 2020, we had the geographical structure on our sales force. And he then together with his leadership team, reorganized that. Why? We do think that, that is a better setup. It is because we want to be customer-centric. We want to ensure that we have salespeople that really understand the categories they understand the business of our customers, and then they need to focus on certain categories. And to be a good supplier in this industry, it's not only about understanding our product, but it's really to understand the customer needs, which means that we need to know the whole value chain. And for all these different categories, they will have different value chains, different requirements and so forth. So now we have category manager for all the key categories that we selected. The categories you see here, the 6 you see here, are our core categories as we call them. They represent 70% of our sales in the Food segment. For all of these, we then have category managers. We have dedicated salespeople, we -- they drive the product development, innovation and so forth so that we have really utilizing our deep insights in the categories to really drive the whole customer experience. Then look at the competitive position and the market position. As you see on the graph or the picture on the right-hand side, we are the leading player within this industry. When you look at the markets, when you look at the number of installation out in the market as well. But also when you look at -- we have the broadest portfolio, and we are in the broadest -- or the highest number of different segments. If you look at the whole market, the whole food sorting and grading market is a large market. It's between EUR 1.5 billion and EUR 2 billion. But a lot of that is really low-tech detection that we are not operating in. We are operating in the high tech, high margin business. If you then look at -- we have been trying to estimate what is really the addressable market that we are operating in. And that is EUR 1.2 billion. And if you then look at our market share, probably you know, and we'll see our sales, for example, into this segment. Last year, we sold approximately EUR 0.3 billion in the segment. So we estimate our market share to be 25% to 30%. And when you look at the growth of this market, the addressable market, we expect this market to grow with approximately 6% per year, but our ambition is to outgrow the market. Our ambition here is to grow more than the market, and increase our market share. So what is then our strategic priorities within the Food segment? It's to maximize growth and focus on operational excellence. That might seem simple. So let's then dive into what does it actually mean in practice. Maximize growth. We are going to focus on 3 areas -- or we are focusing on 3 areas to maximize our growth. It is the core categories, it's expanding in new growing categories, and it is to increase revenues from services and digital solutions. The white bubbles that you see here is our estimated market share. If you look at the 6 core categories that I talked about just before, in those categories, we have between 25% and 60% market share. I can use citrus as an example. Citrus, we have 50% market share in North America, and we have 25% market share in Europe. What we want to do in citrus is to utilize the knowledge and the competence we have in that category to increase our market share in Europe. And this is how we work specifically category-by-category, and we believe there is a significant growth potential also in these core categories. And of course, these are large categories from before. So citrus is a large category from before, but then with a significant potential for further growth. Then we have the expansion categories illustrated here with cherries, avocados and proteins. These are typical categories where we have a low market share, less than 20%. But also these are categories that are growing quickly. For example, avocado due to healthy diets. What we do here is that we utilize the knowledge that we have. We also utilize the knowledge from other categories, develop new solutions into these segments to drive the growth from them. And then we want to increase our revenue from services. Today, our revenue from services represent approximately 23% of our total revenue in the food division, and we have an ambition to grow that. And we're also developing digital solutions as add-ons, but also as services that we want to sell to the customers to increase our growth. Our strategy in Food has good organic growth opportunities, but also we believe there are benefits with consolidation of the industry. As I said on the previous page, we believe we had 25% to 30% of the market. It is still a fairly fragmented market. We believe there will be interesting M&A opportunities coming here, and we want to pursue them, and we see that being value generating. Then operational excellence. In the Food division, we have a very structured program on how to improve in many different areas. We call it the Cultivate program. And what we focus there, we focus on productivity, supply chain optimization, technology management and customer focus. Just to give you some examples. On productivity, it's a lot about taking out synergies. Many of you will know that our Food division is the result of 4 major acquisitions. We have taken out a lot of the synergies from that, but there are still opportunities to still take out more. Supply chain optimization, of course, global sourcing and resilience is high on agenda in the Food division as in all our 3 divisions hears a lot about leveraging the production capabilities we have in New Zealand China and Europe, and how do we balance that out to become more resilient and, of course, our sourcing strategy. But also what we are looking at here, it is our go-to-market models country-by-country, where also we are looking at changing and are changing in some markets to ensure that we are closer to the customer. Technology Management, you heard Harald talk a lot about modularization, and what we have done in collection to make our production model to then both the flexible, agile and have lower cost. Here in Food, we have a quite large legacy portfolio because we have had all the acquisition, and there is a significant potential here by modularizing our product to increase efficiency and agility in production. And of course, customer focus. I talked about this category focus, but also we want to ensure that we have a consistent customer experience from the initial talks to, we do the sales, we do the survey. So we can ensure a consistent and a good experience for our customers. So that was short on operational excellence. And then what goes through everything we do into it, it is about making sure every resource can't. And we want to play a role together with the value chain, not only to drive the to our customers, but also to reduce the environmental footprint, and to contribute to reducing food losses in the world. And that's why we have set a quite ambitious goal. On that by 2030, we want to contribute with reducing post-harvest food losses with 50%. It will not be something we'll do alone. So we are working with the value chain to support the whole value chain in achieving these important targets. That ends the Food presentation, and we will then move over to Recycling. [Presentation]

Good morning, everybody. My name is Volker Rehrmann. I'm heading up our Recycling business. And we are very happy to have you here in our Recycling headquarters. So I would like to start with sharing a little bit of a story of the recycling industry because it's not so familiar to everybody. This word is very different today in many aspects, of course, but in particular, also with regards to the recycling industry. In the past 25 years, we all thought in the Western world that we are doing good, probably all of you at home. Separating the plastics packaging into a separate bin, and we thought we are doing all great with recycling. But it was not. Material was mainly shipped to China, and we all hope they would do some good recycling with that, which they didn't. They just picked the good material, the cherry picking. And at a certain point in time, everybody realized that. And this whole system couldn't continue anymore as it was. So China stopped the import, and then we suddenly realized in the Western world, oops, what do we do with the material? Are we really recycling? I call it a little bit the feel-good phase of recycling. We all thought we were doing good, but we weren't. And this is changing. We are now coming into a new phase of recycling. We are now coming into, let's call it, the professionalization phase of the recycling industry. And why is it changing? Because first of all, we have realized that we cannot continue like that, all the pollution, all the plastics in the ocean, that was a big driver. China stopping was a big driver. But the sustainability agenda on top of this creates, suddenly, a demand for recycled material. This is new. It was never there before. Every brand owner, every consumer goods company now has a target for using recycled material in their products because it saves a hell lot of energy. When you do recycling, you save so much energy, and reducing CO2 emissions. So there is a big demand for this recycling material. But it's not available on the market because what people need is high-quality recycled material, and the industry is not prepared for that. So we have very big drivers for this change in the industry. And legislation has also recognized that, and legislation is reacting to that, and it's another very big driver now. That legislation is putting pressure behind that, that this industry is now really changing and becoming a real recycling industry. On the right side, just as a reference, you see targets of consumer goods companies for what they have publicly committed, how much recycled content they would like to use in their products. And you can also see how far away they are from that. So there is already now a big demand for high-quality recycled material. Unfortunately, it's not available. So there is a higher demand then there is a supply of high-quality material into the market. So this is an example of what legislation is doing. I mean legislation is doing a lot of things. It starts in the country typically with EPR system, extended producer responsibility system. Deposit system is another measure. We see bands of material, we see taxes, plastics, [indiscernible], as you all have heard about in Europe. So a lot of measures. And in Europe -- Europe is clearly a front runner on this legislative side. And if you just look at what the latest packaging and packaging waste directive requires from countries to reach as recycling targets. This is an example of Norway. So if you look at the green dotted line there, it shows you how much material is recycled in Norway using a new measurement method, a more realistic measurement method. And the orange line is showing you what the target is. So what it fundamentally says within the next few years, Norway has to double the amount of plastics packaging. It needs to recycle. And these examples, you can do for all other countries as well. So there is a big pressure to increase the amount of recycled material. And now they are also coming new players into the field. The chemical industry. If you look at the left side of this slide. The chemical industry, the producers of plastics of virgin material have, for 35 years, successfully ignored that there is something called recycling. And they cannot anymore. They are also under significant pressure. Their brand owners, their customers require more recycling material to be used in their products. So now they have finally woken up, and they have also seen they need to use more plastics waste in their feedstock. Instead of using pure fossil fuels, you need to use more plastics waste material in your feedstock. And they have also publicly committed just a few examples that you find here, Shell, LyondellBasell, OMV, Dow Chemical, we can make this is long. Every major producer of virgin plastics has a public commitment to use significantly more recycled plastic waste in their feedstock material. Currently, they are close to 0. So it's a new player also coming into this field. And if you add up what the public commitments are, you easily come to 10 million tonnes that would be needed by the end of this decade. Now let's focus a little bit on the right side of it. So we understand there is a high demand for this material out there. On the right side is the shocking -- as [indiscernible] would call it the inconvenient truth on the right side of it. This is the latest report from material economics, looking at the situation for plastics in Europe. And they started with more realistic figures looking into how much plastics is brought into the market in Europe. And it is around 45 million tonnes of plastics brought into the market in Europe. And then they looked at, okay, where is this material ending up? And you see still the majority ending up in incineration and landfill. 24 million tonnes in insertion, 14 million tonnes in landfill. So 85% in Europe of all the plastics brought into the market is ending up in integration and landfill. After 30 years of trying hard to recycle. Only 15% is really recycled, including the expert of material into other countries, 15%. And the problem with that is that those 15% are mostly down-cycled, so into more low-value application. But that's not what the market wants. The market wants to replace virgin material, needs higher-quality material. So this shows you that the recycling industry has only just begun. It's really a new face in the recycling industry. We are just starting to make recycling real to professionalize this industry. And from this right graph, you can also see what it takes in order to get there, to reach the demand and also to reach the legislative requirements. Number one, we need to recover more material. We need to collect more material, recover more material, to bring it into the recycling process. That's the #1 priority. Number 2 priority. When you have it in the recycling process, so when you have a hold of it, we need to produce high-quality material. Not down cycling, we need to produce material out of the plastics waste that has virgin-like qualities because that's what the market needs. And this is then also kind of describing what we at TOMRA are focusing on with our solutions. So if you look into what do our sorting systems do for a circular economy. Sorting is one of the -- some might say the essential step within the circular economy. Our solutions to do those 2 things I mentioned. The first one is we recover materials out of mixed waste streams with our technology. And you will see a few examples within an hour or so that we show you how these machines work, what they can do, how they recover material. So you can basically use any type of waste streams. You can even use your dirty household waste at home, put it into a modern sophisticated sorting plant, and the material will be sorted. So this sorting step you can see as a first step, recovering the material. Think of it if you would put a sorting plant in front of every incinerator, you could recover all plastics out of it. So that does not end up in incineration and create CO2 emissions by basically burning fossil fuel. That is technically possible today with our solutions. And it's being done in a few examples. We have developed this segment. It was not easy, and many people believe it is not possible. But it is possible. We started a few years ago as a pioneer to develop this segment, and we have a few plants incinerators. We have installed sorters in front of it. In the Nordic countries, in Norway, there are examples in Sweden, there are examples in the Netherlands. We have examples of that. This works. It's not a technical problem. It's just a problem, do you want to do it? And is there a kind of financial incentive behind it. The second part that -- and this first step, basically sorting mixed waste stream makes up 65% of our business that we do. The next part is the recycling process. So once you have recovered -- make this material available for recycling process, you need to create high-quality material. This basically means -- yes, if I put it very simple, you need to wash and sort the material in the recycling process. You need to make it clean and sort it into the highest purities. This segment makes up approximately 25% of our business. And then as a third element of the business we are doing, we have the Mining segment, where we use our sorters to recover and sort ores, basically to reduce the environmental impact. Our solutions can save a hell lot of energy and water in the mining industry by using dry sorting compared to traditional waste -- wet processes. This is just a picture showing you how this typically looks like a sorting plant. On the right side, it is one in Norway in close to Oslo at Ever. On the left side, one in Germany, gives a little bit of a flare of how these sorting plants look today. And they are developing into fully automated plants. It's not the dirty old stuff anymore like it used to be in the past. In the future, you will see highly automated, more like production sites. The latest one, the most modern sorting plant in Europe is in Munich, built by [indiscernible]. It has around 50 of our sorters, fully automatic, clean, nice, great. Now let's look in a little bit how we see the market growing going forward. So this is important for you. On the left corner, at the bottom, you see how we currently estimate the market for us. And the market is the sensor-based sorting equipment market in the recycling industry. We currently estimate it to be a round of EUR 400 million market. So still relatively small, has already grown nicely over the last years. We estimate our market share to be around 55%. The next step we will see, and all studies show it, there will be a capacity growth in the market. More material will be recycled going forward. There are various studies out there that you can look after. So the general average estimate is that there will be an average annual growth of 8%. So our markets will grow by an average growth rate of 8%, just by additional capacity. On top of that, we see that there will be a higher degree of automation happening. I mentioned the fully automatic plans. In the past, there was still a lot of manual sorting together with the optical sorting. In the future, the trend will be fully automated plant. So there will be a higher penetration of technology, of our sorters in this, which will add to this growth rate of 8%. So in total, we estimate our markets to grow in the next years with around 10 -- 12%. So you can assume that we will defend our market share that we will grow with the market of 12% per year going forward. On top of that, we will, of course, do more innovation. As we have always been doing in TOMRA. TOMRA is the pioneer in developing new applications, new market solutions, developing new markets, So we will also innovate in new segments for automated sorting in different material categories. It's not only about plastics. We are also sorting metals. Aluminum alloy is an example. I will show you on the next slide some examples of that. On the right side of this slide, you see what also Harald has shown, our competitive position. I mean, we are the market leader in this segment. We have been the pioneer. We have been developed this market over the years. And of course, we clearly have plans to continue to do so. Just a few examples that I mentioned, why we will create additional growth to just the capacity growth. On the left side, you see the plastics part. I mentioned that the quality needs to improve in the recycling process. The market needs high-quality recycling material. And that requires more technology coming into this segment. And what we have been doing at TOMRA, we have also invested together with Borealis in a demonstration plan where we wanted to show the world that it is possible to produce very high-quality of plastics waste, no matter where the material comes from, whether it comes from nice, clean, source-separated material or whether it comes from dirty residual household waste. So we've invested into very advanced process here, a very advanced washing line, very advanced sorting systems there to create a very high quality. And that's what you will see this afternoon when we go there. And on the right side, you see some of the examples where we want to continue to innovate new solutions wood sorting. It's not only the plastics industry that would like to use more recycled content in their products. It's basically every industry. Every industry, every company has a sustainability agenda, and every company wants to use more recycled content in their products. So it's also happening in woods. It's happening in textiles, and it's happening in metals. You will see a demonstration also today in our test center here about wood sorting where the target is exactly the same, use old wood, which is a bit contaminated, sort it into high qualities so that you can use it in new products again. Textile sorting is a very interesting segment that is currently developing. We all know that the way we use and treat textiles is a mess. We very often -- this fast-fashion industry cannot continue like that. They also need to do more recycling, closing the loopholes on textiles. We have the first sorting plants out in the world. And Tove will also say a few words later about this, the opportunities we see there, where we sought with our systems textiles into nice qualities of material that then can further be recycled. Last example, aluminum alloy sorting. Aluminum recycling is not necessarily seen as a problem because the recycling rate of aluminum is extremely high. It's already today, 90%. So you could ask, so what this is working well. Yes, partly, yes, it has a high value. So it is recovered and recycled, but it's always a mix of aluminum. It always goes into the lowest quality because it's just a mix. You can only use it for low-quality applications. But the trend today for aluminum usage, think about all the cars that will have aluminum bodies, you need higher qualities. You cannot use a mix. You need pure alloys. And that's the latest -- and I have a technology background, for me also the greatest development we have been doing in TOMRA. We have developed a laser and [indiscernible] system where you shoot with lasers on aluminum pieces, create a plasma, measure the elemental composition of it. It's a little bit like Star Wars. While the objects are moving, you shoot on them on laser and measure the resulting emissions from plasma. It's just amazing. And that will help you also creating nice qualities of different alloys, which then allows closing the loop on aluminum also in higher applications. Looking a little bit into our strategic priority areas. I mentioned the first one already. It's accelerating growth. I mean we use this analogy of the iceberg here, for obvious reasons. Currently, recycling is only looking at the tip of the iceberg. There is so much more material that needs to be recovered, recovered from areas where it's currently lost, mainly incineration and landfill. We have the technology. We just need to convince the world and demonstrate that it is possible and doable, and that it makes sense. Let it makes sense without doubt. Instead of burning plastics, you should recover it, and use it to replace virgin material. You have a double effect. By not burning it, you save CO2 emissions. And by using it to replace virgin material, you again save CO2 emissions. It just makes perfect sense. We expect in synergies in the future will become part of the European trade system for -- emission trade system in Europe that they will have to pay for the emissions they produce. These developments will drive this business. So we will increase the recovery of recyclables. It will just make our addressable market bigger. And secondly, we will focus then on developing processes and enabling a high quality for those recovered plastics waste. Without that, it doesn't work. It needs to be in balance. What you recover, you need to be able to bring to a high quality so that you can really replace virgin material. That's where the demand of this world of the brand owners is. And on the right side, you see the more obvious one. Of course, we would like to continue to provide leading solutions and innovations to this industry. We have always been using cutting-edge sensor technology. We will continue to do that. I mentioned this [indiscernible] laser-induced [indiscernible] spectroscopy system. But also the latest trends in artificial intelligence, they help us. Object recognition using AI, using deep learning networks has made tremendous success. And we will use this. We are already using, and we'll use more of that in sorting tasks, where, for example, the material is the same. It's for more granular sorting. So our classical materials sensors see it as the same material. But for -- there are special reasons why you want to further sort it. Example would be for food contact material whereas non-food contact material, those type of applications. And there is a long list of applications where artificial intelligence clearly helps going forward. We will, of course, do this all based on our really deep market expertise. We have been doing this now for 25 years. We have not jumped on this green train. This is basically all we are doing. All we can do. So we have really, really deep market expertise, and we cooperate with many players and stakeholders in this market. And of course, like in every presentation, you see digital solutions will play an important role in the future. The recycling industry is not a very mature industry. The recycling industry needs to professionalize, and digital solutions bringing more transparency into this industry, into the material flow, will be an important backbone on that. And I encourage you to also -- we do some demonstration of our digital solutions on that side. I encourage you to take a look at it at that break. So my final slide, what is our mission here? We are here to enable closed-loop recycling solutions, material stream by material stream. Biggest focus is still on plastics. There is the biggest problem but also for lots of other streams, material streams, as you will see in our product demonstrations in the test facility. We have committed that we want to help the world coming to a 30% rate of closed-loop recycling for plastics. Currently, we are at 3%. We have committed by the end of this decade. We want to achieve that. And think about it, the world today is only 8.6% circular. There's every year, this circularity gap report. In general, when it comes to the materials, the world is consuming 100 billion tonnes of material, and only 8.6% of that is circular. So there's a lot more to be done in the future. Thank you. I think we're ready for questions and answers, Georgiana.

Thank you, Volker, and thank you to all the speakers so far. I invite you all on stage. So this is our first Q&A session, dedicated primarily to the divisions. We will take questions both from here and from the web. So if you have a question, just raise your hand and my colleagues with the microphone will be there with you.

Yes. Okay. We have one question here. We'll take one from Aurelio.

It's Aurelio from Morgan Stanley. The first question is around is the first time you talked about Latin America and APAC in collection being so prominent. I wonder, obviously, the time frame for that is going to be slightly different. I don't know if you can put some -- not necessarily numbers, but give us some indication of the growth that we could see in Latin America because, obviously, Uruguay starting then many other countries could possibly follow, Singapore, as you talk about? And what's the opportunity going forward in these markets? Because I think the European side is more well understood.

Yes. Latin America. As I said, it's Uruguay will probably or most certainly be the first country in Latin America. It's a small one. not that many inhabitants. But it's probably the most, let's say, relevant. It's very hard to say when Chile when Brazil when other countries in Latin America will introduce deposit. So it's -- I don't really have a number on that. I think on Asia, we have worked in China for 10 years. We believe that -- it's also hard to say anything about years. We have, as I said, tried for 10 years. It's a lot of work with politicians and so forth. But China will probably start with some big pilots. And a city in China is -- could be a quite big pilot, but it's a few years into the future. But Singapore has very concrete targets. It will happen in Singapore. The question is whether it's in '23 or '24. It could be later because it's political processes. But I think it's a very good starting point. As I said, everyone in Asia is looking to Singapore. So a very good deposit system in Singapore, could also be a driver for other countries. I think that's the only thing I can say about these areas.

Okay. That's helpful. And if I may, one more question. It's around the current exposure that you have in throughput models. I don't know if you can give us some numbers or some rough estimates of the percentage of your sales are going to throughput models. And on that, of the big European countries that don't have a legislation right now, I'm thinking about France, Italy, Spain. Do you think that some of those big countries could go down the road of implementing [indiscernible] models?

Yes. So today, we have throughput models in all Baltic countries, Latvia, Lithuania, Estonia, all states in Australia, we'll have a throughput set up. And then, of course, a lot of the business we're running on the East Coast of the U.S. is throughput-based. In our plans going forward, we see that most Western European or most European countries will have regular sales and service. Maybe it could be a part of -- it will be fairly small on throughput, but it could be more in Eastern Europe. So I think that's also new states opening up in the U.S. could be a mix of sales and service and throughput.

Okay. That's great. And maybe if I can just squeeze one last question. Sorry about that. On recycling, I think you talked about very interesting going forward. But it feels like downstream is still the biggest bottleneck whether it's more mechanical recycling, chemical recycling, what do you think is going to be the trigger point for the world to see more recycling upstream? Is just downstream the biggest kind of bottleneck at the moment?

Yes. It's always a combination. Those 2 things need to be in the balance. But you're right. Currently, we are collecting more material than we use in high-quality applications. What is really needed is a trend towards more quality recycling processes. And that is happening today because for the first time, there is a demand for it out there. So it is happening mainly on the mechanical recycling side. The role of chemical recycle in the future is still a bit open, I would say. I mean we are absolutely convinced it will play a role there for some difficult to recycle material. So I don't necessarily see a trigger point. It's an evolution. It's happening already today, year-by-year, and we see it also in our business. The good thing for us is that every recycling process, whether it's mechanical or chemical, needs sorting as an essential step, also chemical recycling. It's not like sometimes people believe you just throw a mix of waste into a chemical process, and outcomes gold. It's unfortunately not like that, or unfortunately, from our perspective. So a chemical process needs a stable material input flow. It cannot just fluctuate too much, and that basically means it needs to be sorted prepared to a certain recipe.

Thank you. Let's just take one question from the web first. It's for Volker. On the Recycling business, how the regional municipal differences in recycling impact your ability to scale and the industry's ability to source recycled material of sufficient quality? Regional municipal differences in Recycling.

We don't necessarily see that as a major problem. Because, as I said, we can deal with all types of different compositions of ways, whether it's separately collected or whether it's a mixed waste. In the past, it was different. We relied on the more separately collected material stream. But today, we can work with all different types of waste streams. And whether it's a single-stream system in the U.S., whether it's a green dot system in Europe or whether it's completely residual household waste. So that doesn't impact our ability so much there.

Thank you. I can take one more question from the [indiscernible] Yes. I think we will take one question from this side.

This is [ Jorg ] from Union Investment. I have also a question on recycling. I mean, the objectives to do more and the regulation, it's all, I think, in place and getting ready. But the question is a bit about the economics. If I talk to, let's say, waste management companies out of the states, they usually dump everything on the landfill. And they would say, well, we're not getting incentivized to recycle, and it would also cost too much to do it. So we're not doing it. What's your solution to persuade them to use your machines and your objectives?

First of all, I think it's a very valid observation. If we reflect a little bit why recycling has never taken off, part of the -- or one of the main reasons it has never been a great business, so people don't invest into this. That's why also the legislative part is so important. But we see 2 trends here. One is the demand. Brand owners want this material. They need this material for their sustainability agenda, and they are willing to pay premium prices for it. Number one. I mean, look at the price development of PET, highest-quality PET recycled material. For many years, there is a significant premium over virgin material, who would have ever believed this? When I started in the recycling industry, especially the Americans, they would have laughed at you. More expensive than virgin, you're kidding. No, it is -- so that is 1 driver. Think about the oil price. The main factor why plastics, virgin material is so cheap compared to recycled material is the oil price. And that has been -- in the past, how many years, 15 years, the oil price was on a very low base. So it was difficult for recyclers to compete. The cost for recycling material is depending on kind of fixed cost on collecting and sorting it. The prices of virgin material are mainly depending on the oil price. And when the oil price was so cheap, it was partly difficult to compete. Whereas the oil price today, what our expectations for the future for the oil price? So clearly, improving situation for it. And last but not least, legislation. Look into the developments we see here, emission trading systems, emission will get a price. So when you just dump or burn plastics, you will have to pay for it. This will make recycling more attractive, the plastic tax that Europe has introduced. I mean it depends on how it will be implemented in the different countries. But basically, it will make virgin plastics more expensive. It's already happening in the U.K. and in Italy. It makes virgin plastic compared to recycling plastics more expensive. So various elements contributing to that, where I think, and you're absolutely right, that's the main driving factor, recycling will become a business. And last but not least, when you think about that, when this industry professionalizes and builds plans at scale, it will also be possible to become more cost efficient on producing recycled materials.

Thank you, Volker. Let's take one more quick question from the web. I think it is for all of you. Does your new growth ambitions include M&A? Or is it purely organic?

Yes. So we'll talk a bit about that also later. But the strategy that we're presenting today is not dependent on M&A. We believe that we have significant opportunities to grow organically, and that will be our focus. However, in the Food segment, as I mentioned, we have a fairly low market share, 25% to 30%. It is a fragmented market. We think it will be beneficial to do some consolidation there. So we expect it to contribute into our ambition on growing in Food. In the 2 other divisions, M&A will mainly be linked to potentially technology, digital capabilities is [indiscernible] enabling technologies for driving the business.

Thank you. Tove, can we have one more question? Yes.

Thank you, Michael [indiscernible] from GLS Investments in [indiscernible]. I have a question regarding the collection business. Could you maybe possibly tell us your expectation on annual growth rates in this business because you gave it for the other businesses. And then also in the segment about service revenues, what's the share of service revenues? How do they grow, especially what you expect in service revenue in the future? And just for understanding, can other companies do the servicing of your machines as well? How is that share? Or is it maybe possible in the future? Yes, that's the one question.

Yes. As a service revenue. If you look at sales, sales versus service is approximately 50-50. But if you look at the total revenue split for collection, you also have -- if we keep throughput outside, the throughput part is growing due to that we have won a lot [indiscernible] in New South Wales, and we also expect a good development in all states in Australia. Then we also have the material recovery. So it's mainly for different parts of the revenue, but sales and service are split 50-50. Other companies could do service as well. And earlier, there was some third-party service providers. But it's not really happening. I think we really have developed our service organization. And we see customers also demanding actually that we do service ourselves because of the success we have with it. So I wouldn't see that as a big sort of challenge going forward, but it is possible. On growth rate, I'm not sure what I'm going to say that whether we want to sort of split it into the different -- it is event-driven. And that's what I said also on the production of machines that, let's say, U.K. comps and then we get a big share of that. Of course, that will be a really, really good year, and then maybe it's a few smaller countries a year, and then you get Poland and Spain and then -- so it's very hard to sort of say exactly what that growth rate will be. It could maybe be 20%, 30% 1 year and it could be 8% another year. All depend on a deposit legislation, and when it comes.

Thank you, Harald. We take one more question from the web going to Fabian. It's also for collection. Adoption of DRS and for that matter, recycling infrastructure has seen much higher take-up in developed markets like the EU. But studies show that some 90% of Ocean plastics comes from river runoff into stain rivers, primarily in emerging markets. What efforts have you targeted in emerging markets? And is this not the biggest opportunity for you?

It's probably the biggest opportunity, more long term. But now, of course, a lot is happening in Europe. But at the same time, we continue to work in China and Singapore, as I said, we have also spent some time in India, and politicians are extremely eager to make something happen. But it's more -- it's back to the time lines, again, when will it happen. But we are definitely present. And as I said, we want to be early into the markets to be able to influence, and make it into a sustainable system in the end. What we believe when we talk about emerging markets is that it will be a different kind of setup than what we used to in Germany or Norway or Sweden and so forth. It will -- it's not the same retail structure. So that's why the experience we have in Australia, as an example, using our modularized systems with kiosks and with outdoor solutions and so forth. We think that will be a more adaptive solution for the emerging markets together with the software solutions and so forth. So we have already thought about what kind of technology, what kind of setups will be important in those markets.

Thank you. We can go ahead, Fabian.

Fabian from Carnegie. So you stated a 10% to 12% growth rate for recycling mining over the next years? And just having the, let's say, the growth rates for the past few quarters in mind, how should we think about that given that you've had substantially higher growth rates now, the run rate, at least for 2022?

I was probably not good enough in my explanations. I said the market will grow with what we expect that the market will grow with around 12%. But we will do innovation on top of that. So we want to grow higher than that.

Okay. So your increased sales CAGR guidance. Is that primarily from recycling mining, Collection Solutions? Or how should we think about that?

Yes. We will, of course, talk about that later today, but then we already looked at you, what we send out this morning. We expect that Recycling and Collection will grow more than Food. We said ensure that the market is growing with 6%. We expect to outgrow the market. I would say we would expect kind of high single-digit growth in the Food. while we would then expect Recycling and Collection to grow higher. As Volker commented, in Collection, it's difficult to give this growth rate because it's really about stimulating when do you think the different markets will come. While then in Recycling, you have the underlying segments that we are in, where we believe 12%. Then we're going to work hard as we have done always, to increase into new segments, will give additional growth.

Thank you. Other questions from the room? Yes. We have one question here.

This is [indiscernible] from [ Alpine]. Yes, when you're thinking about recycling, it's really a systems approach. I mean that there's so many components in the value chain and you're providing 1 service, which is extremely valuable at the end. I was wondering if you could provide any insights on any challenges or opportunities you see on supporting education and regulation. And if you had any examples of where TOMRA as a leader has really pushed that, maybe on the upstream side a little?

Yes. We've been. Volker been working hard on that with his team.

Yes. I mean you're absolutely right. And that's also why, TOMRA -- you might remember 3 years ago, we started our circle economy division with that target to have a more holistic view to work on more holistic solutions because we are only -- our products are only a part of it, a very important part of it. But we need to think about the holistic, always. We recognize that, and we set up a dedicated team to work on that. And since then, we have been working a lot with various stakeholders, completely new stakeholders to term. We are in, let's say, daily meetings and discussions with the chemical industry, for example. The chemical industry will play an important future role here, entering the recycling space. We are regularly talking to brand owners who want their recycled content. We are talking to converters. And of course, we are talking to waste management industry as always. So it's a new trend for us. We are discussing and cooperating with completely new stakeholders in the entire value chain. And if you look a little bit our publications, we have done quite some work also white studies that we have published on our view what needs to happen, what the benefits of a circular economy can have to climate change, how many CO2 emissions could be saved if best practice recycling would be applied globally. So we are really doing a lot of work, which is relatively new to us. Where in the past, we were only talking to our customers. Now we are talking to the entire value chain. And not only talking, maybe talking is not enough. It's really cooperating. And the example this afternoon we see, it's a joint effort between Borealis and TOMRA, for example.

Thank you. Other questions from the room? Yes, we have one question there.

It's [indiscernible] from BlackRock. I know the mining business is small, but I'm just curious, could you tell us about the demand and growth in that business in an environment where we have higher commodity prices, strong decarbonization plans from these big mining groups. Just wondering how much are you thinking can grow over time.

Yes. With mining, we maybe have become a little bit more humble over the years. The mining industry is a very conservative industry and applying and introducing new technology in the industry is a cumbersome process. But you're absolutely right. Our sorters have high benefits for this industry, and we are starting to see that. And we are also starting to see that in projects in mining projects that have a high importance for the decarbonization of the industry. Think about lithium projects. We have now many more lithium projects because this world needs more lithium. We also have many more mining projects in Europe because Europe is reopening mines. And there was a reason why they were closed because the quality was not good enough. But again, our solutions help to improve the quality. So that really mining these mines again makes again. So yes, we are -- we see a good growth development in our mining business, and it's maybe -- on a good rate, a little bit lower than the 1 we currently see in recycling, but not far away.

Thank you, Volker. Let's go back to the web take one question. On consolidation in Food -- it's from Daniel from ABG. On consolidation in Food, how do you think about this and the margin picture in that segment, no impact? Or do you expect it to increase margins?

Yes. So I think, of course, scale is an important factor in food industry -- or our Food business as in the other businesses. Of course, we -- when you look at the margins in food, we'll work on many aspects. We work at the things I talked about around operational excellence, really looking at our processes, how we produce modernization, all of those things to increase margins in the existing business but also scale will give us operating leverage. So when we look at acquisitions, we could do acquisitions for different reasons. This might be a category where we feel that we are weak that this could be a way to enter the category. It could be a technology that we are missing, or it could be that there will be really synergies and operating leverage from doing it. So yes, scale and margin expansion is, of course, one of those possibilities through acquisitions.

Thank you, Tove. Let's see in the room, if there are other questions.

And then also, I remember, I forgot when I was presenting food to sell the food station over here. So we will have [indiscernible] of our [Audio Gap] longer term.

Thank you, Tove. And the time is up. We will have a break. For the web audience. We will be back at 10:30 a.m. So a big thank you to all the speakers so far. So during the break, there will be a demonstration of the R1 machine in 10 minutes, so 10 plus 10. And we have our digital and food stations on the side here. So please visit our colleagues, and have a chat with them. [Break]

Hi, again, everyone. I hope you enjoyed the break. It's time to sit down because we will start the second part of the presentations. Thank you. Welcome back, everyone. Welcome back to our digital audience as well. We will soon start the second part of the presentations with Tove and Eva here on stage. But before that, we will also watch a short movie. [Presentation]

I hope you all have a good break, and that you managed to engage with my colleagues and see some of the demonstration. We will now then dive into corporate strategy and sustainable growth. What we showed you before the break was how we were going to accelerate core growth in our core business. And there are similarities and differences between the different divisions. When you look at the growth forecast, which is a common focus for all the divisions. In Collection, we will grow in -- as the new markets commenced on stream on deposit, but we will also grow in existing markets through innovation. In Recycling, we talked about growing with the segments that we're already in, but also how we're going to push boundaries, and develop new segments with technology. And in Food, we talked about increasing market share and geographic presence, and focusing on the key categories. Supply chain resilience and digital with the commonalities in all the 3 divisions strategic priorities. When we look at innovation, which also is a common focus, the actual areas that we're looking into is somewhat different. Harald talked about customer-centric innovation to really give a good recycling experience. Volker talked about how to unlock new segments through innovation. And in Food, it is more about portfolio optimization due to our legacy. We also talked about collection being legislative-driven, and also partly recycling being supported by legislation. So engaging with policymakers are important in those 2 divisions and somewhat in food, but to a much lesser extent. And we talked about M&A that yes, M&A might be an enabler more on the tech side for collection and recycling. But it could be a significant part or it could be an interesting part of the growth agenda in food. So our strategy is built on organic growth, and it really core growth engine as we see it for the next 5 years will be in our core businesses. However, we have a solid market position, and we have a good financial position as well. And we want to utilize this to develop adjacent businesses. So now we're going to talk about what does that mean. Volker mentioned this briefly earlier. A few years back, 2019, we established a unit for circular economy. We knew that we had significant knowledge about the whole value chain, and what is needed to create circularity. And we then to decide a dedicated team to focus on that, to become a thought leader, but also to identify new opportunities to do business development. And now we have come to the point that we believe that and see that there are significant opportunities here. Opportunities that are based on our competitive edge, our market position, our knowledge and our technology and utilizing that in leveraging on the strong macro trends linked to circular economy and resource efficiency. What does this mean then more in practice? So what are we looking for when we talk about the adjacent businesses. We are not looking at something that would typically be in the core. And I want to stress that we will still have a lot of development activities in the core businesses as you saw this morning. But what we are looking for here are business models that have the potential to become significant. We need to be careful on how we use our resources, and we only want to allocate resources into opportunities that can become significant. What means significant that it could become a new leg of TOMRA. And it should be right for scaling. This is not about R&D activities, long-term developments. This is about identifying business opportunities, it's about business building and identifying business opportunities that can be scaled over the next few years. And there should be opportunities where we have a competitive edge, opportunities where we have the right to win due to our 50 years of know-how, due to our technology or through our value chain expertise. And of course, it should not be needed to be said, but of course, it needs to give strong capital returns. We will not enter anything that we don't believe will give that. And also, we will launch, later today, updated targets, and these targets are also applicable for the adjacent opportunities that we look into. And also how we will manage this is that we will manage this a bit separate than the other divisions. We want to ensure that we don't disturb the divisions on really delivering on their strategies. As I said, earlier, the core divisions are still the kind of key part on delivering on our financial targets for the next 5 years. So we will ring-fence resources working on this to ensure that we don't disturb that. But also, we believe that the adjacent opportunities should represent up to 10% of our revenue in 5 years. So then say a bit more on the areas that we are looking at, textiles, digital, plastic and reusable. Starting with textiles. Textile is probably the least circular material in the world today. If you look at textiles, less than 1% is being recycled in the closed-loop, fiber-to-fiber, 1%. And if you look at the global CO2 emissions from the textile and fabric industry, some different figures, but roughly 10% of the global emissions are linked to that. And we all know now how the fashion industry is under pressure due to this. This needs to be solved. And recycling will be part of the solution to solving the sustainability issue in textiles. Why does it happen today? It is about recycling technology, but a lot of things are happening there, both on the mechanical and chemical recycling side. But it's also about enabling automation in textile sorting. If you're going to be able to do this in an efficient, scalable way, you need that. So we're looking and investigating into that opportunity. And also, of course, Volker had this on his strategic agenda again. So what we are looking at here is not about selling sorter into this. That will, of course, be part of a future setup. But this is looking at what raw can TOMRA play to unlock these opportunities that then would go beyond just selling sorters. Digital business model. We sit on a lot of data, a lot of insights. Orange going through our sorting machines, we get like 300, 400 readings on each orange. The metal going through our sorters, we know the quality is coming to enable transparency, enable crops certification scheme and so forth will play a role, digital marketplaces. We are investigating and exploring opportunities there as well. Reuse. We have talked a lot about recycling. But of course, the reuse is also part of the solution. If you look now in big cities, litter. Takeaway is probably the biggest contributor to the litter that you will see there, McDonald's cup, the different takeaway cartons and so forth. This will be pressured to be solved, and they are also going to probably come legislation here supporting this. What we are looking at, how should the collection systems be for reusable packaging? How can you set up an efficient scheme on this so that you can enable then a closed loop because it doesn't help to have reusable packaging if it doesn't get collected and reuse again. So that's another opportunity that we are working on. And then we are closing the gap in plastics recycling. And I'll dive a bit into that one. Volker has already set the stage for me on this one. So yes, really explained the gap that exists today. In Europe alone, 24 million tonnes of plastics lost incineration, burned, emitting CO2 and [indiscernible] produce new plastics to replace it, 14 million tonnes to landfill. And the challenge is that, of course, you could sort this out of the incinerators, but they are not large enough to really have the high-quality sorting, you could recover extracted from the incinerators, but they are not large enough to really have the sophistic gators starting there. And then on the other hand, you have this demand for recyclopatic that we believe are really increasing now. There is already in the bond there. But when you look at the commitments, and focus how some of those as well, just looking at the major plastic producers and the targets they have. They will need 10 million tonnes more of plastic. Then you can't only take what is separate resources. You need to also look at what is going into mixed waste. And they need it in a way where it's already sorted. Because typically, the recyclers, they will only want to have certain fractions to be able to recycle it in their process. So there is a gap here. And then how to close this? It is about advanced sorting. You need them to recover the mix plastic, but you also need to get it sorted into a way that the recyclers can use it. And also, as Volker said, we have done this. We have worked on this for many, many years. We know it is feasible. Many doesn't believe this is feasible. They think there's dirt plastic from mixed waste, you will never be able to get it in a way that the recyclers can use it. But we know that it is feasible. So what we are working on here now is business models on how can we enable and work with the value chain to close this gap. And we are now working on that, and we expect that we could commit more details on the first investment, probably early next year. So what we have done so far? We have talked about how we are going to accelerate growth in the core. We also talked about that in addition to that, we want to develop adjacent businesses. But then how does this actually come together, what are our ambitions going forward. So then I will invite Eva on stage, who is our CFO.

Hi, everyone. It's really nice to be here today and present and our future ambitions for the next years. But first, I would like to recap a bit on what we set back in 2018 at our last Capital Markets Day in [indiscernible]. We had -- back then, we had 5 targets. It was related to growth, profitability, capital allocation, dividend and return on investments. Our ambition on growth was to grow our business more than 10% for those 5 years. We have been able to grow our business 10%. On the profitability target, we aim for moving towards the 18% EBITDA margin. During this period, we have been able to add 2 percentage points to our EBITDA margin. And also taking into consideration that we have invested in new markets for TOMRA Collection during this period, but also position ourselves in circle economy space. I think also, we all know what it has meant for TOMRA to -- with pandemic, but also with the supply chain disruption that we have seen over the last months. We also have a policy on the dividend. So we have -- that we want to pay out 40% to 60% of our EPS as dividend yearly. During this period, we have been able to pay out 40% to 60%. And on top of that, with cash flow growing at 15% during those years, we have also been able to deliver -- or to pay out extraordinary dividend twice. TOMRA has also, during these years, had a low leverage ratio. Only 1 time, 1 year, we have had a leverage ratio that has been above 1x net interest-bearing debt over EBITDA. So with that low leverage ratio, we have also been able to maintain being investment grade company. The last target that we had back in 2018 was related to return on investments for new projects. And during this period, we have also had solid results on new investments, and also being able to increase the ROCE during this time. Even taking into account that we have the IFRS 16, the leasing standard that was implemented in 2019. And to just give an example, we had throughput markets in Australia that has given good results for TOMRA. So looking into the future, we have also now defined 5 targets for the next 5 years. It's related to revenue growth, where we aim to grow the company 15%. And that really means that we want to double TOMRA's revenue within the next 5 years. On the EBITDA margin, we want to expand our margins to 18%. Our dividend policy stays firm, and also we want to maintain being an investment-grade company. On top of that, we have also now target and sustainability, and we will give more details on that at the end of the presentation. If we look at the first target, where we want to grow the company 15% on revenue for the next 5 years, it's -- this is quite ambitious. And what we have heard today is that we want to -- so the main growth will come from core business because this is where we really see we have most of our value pools. It's mentioned in Collection, it's mentioned in Recycling, but also in Food. So TOMRA Collection and TOMRA Recycling, they will aim for growing double-digit figures, as we have heard earlier. And Food want to place their target at the high single digits for the next 5 years. And I think also, we need to remember that it is challenging times that we are standing in currently. We have high inflation. We have geopolitical instability, but also a fear of coming recession, which also Tove has commented on. But still, we believe that our market drivers are really, really strong and also may be more relevant than ever. On our profitability target, we are aiming at 18%. And how are we going to get there? So of course, we need to recoup from the cost inflation that we have seen over the last months, and we are quite confident that we will be able to do so. The next step is related to growth. And with growth comes efficiencies and scale effects, but also taking into consideration the TOMRA Collection and TOMRA Recycling will drive -- will grow at a higher rate having also higher margins than Food. So that will also have a good impact on our margins. But also, we have a margin expansion expectations in the Food business. And third, we expect that not only a revenue growth coming from adjacent opportunities that Tove just mentioned, but also giving healthy profits going forward. In TOMRA, we are in a quite fortunate position. We have good cash flow from operations, and also being a quite CapEx-light company. Going forward, so we have now currently a CapEx need of approximately NOK 500 million, NOK 600 million as a yearly run rate. And this will probably increase going forward because as Harald mentioned, we probably need to expand in production. And also, some markets will also materialize as throughput markets. Still, what we see is that the main growth will come from core business. And taking that into consideration, also being a fairly capital-light company, we believe that we will be able to maintain our dividend policy also going forward with 40% to 60% of earnings per share. Today, it's been released that we have received official rating from scope ratings. That gives TOMRA an official rating at A minus. Our financial risk profile is assessed at A, and our business risk profile is assessed at BBB+. For TOMRA, this is an important target also going forward because it kind of like indicates that we have both hands on our steering wheel. Of course, we have had a fairly low leverage ratio historically, but also looking into Q1 '22, we ended at 0.5x net interest-bearing debt over EBITDA. We believe that even if -- with all the activities that we have planned that we will be able to maintain a good rating for its company. Also taking into consideration that the growth will mainly come from core business. So today, we have a good headroom, and we are kind of like very confident that we will stay firm to being -- to continue to being an investment-grade company, also in the future. So if we look at financing, our debt levels in TOMRA is quite low. Our current financing consists of mainly bond issues. And one of them is maturing now in November this year. It's the NOK 400 million. So looking into refinancing but also financing of new activities, we are targeting a green bond framework. With the preliminary taxonomy alignment of 60%, and also what you will see that we have set ambitious target for sustainability going forward, we truly believe that TOMRA will be good positioned to get access to financing, and capital pools also going forward. So in TOMRA, it's important not only to aim for profitable growth but also sustainable growth. We recognize that it's an important sector so that sustainability is an important sector in a competitive market, but also to attract talents and to retain employees. So our sustainability target is a threefold. So we want to lead the resource revolution while becoming a fully circular business and being safe, fair and inclusive. And what does this mean? With our handprint, we want to maximize the positive impact from our solutions. With our footprint, we mean that we want to minimize the negative impact from our operations. And in people, we want to create social value for our people, so our employees, but also business partners going forward. So what we have done within the sustainability area? We have set a holistic set of targets. And we have focused on the areas that are really -- where we can make the most impact going forward. And today, it's been launched on the new tomra.com, a full list of details related to the sustainable targets going forward. but also supporting information. But I just want to highlight 3 items for you here today. And first is that we are committing to a net-zero emission by 2050. And we are also targeting Science Based Targets going forward. One other example is that going forward, we are aiming for that to use at least 90% sustainable materials in all new products by 2030, and that our products are 50% circular at their end of life time. We also have an important target related to people. We want to be inclusive, add diversity, but also be -- take health and safety into consideration. And what did we think with this target, this is really important for TOMRA because our people is really the most valuable asset that we have enable to -- in order to be able to deliver on those targets going forward. So with that, this is a summary of all the targets that we have set for the next 5 years. It's the revenue growth at 15%. We have the EBITDA margin at 18%. Our dividend payout, 40% to 60% of EPS as before, and we want to maintain investment-grade company. In addition, an important factor going forward is to have sustainable growth for the company because this will be a key element for the future growth of TOMRA. And with that, Tove, I think I give it over to you.

Thank you, Eva. So then to sum up. So what we have told you today is that TOMRA is uniquely positioned through our 50 years of experience, through the know-how, the competence we have, the people we have, the technology that we are selling in all our areas that we are uniquely positioned to leverage the global megatrends that are currently being accelerated. And we are going to leverage those by accelerating growth in our core and developing adjacent opportunities. And as Eva just shown, we have set bold ambitions, Board ambitions linked to doubling our business in 5 years. This is not going to be straightforward. This is not going to be easy. But after what I've seen since I entered TOMRA, I'm confident that we have what we take -- what it takes. I'm confident that the market opportunities are there. It's not going to be straightforward. It's going to be challenges. I'm sure we're going to get some setbacks, but we are very committed to deliver on this. Because for sustainable planet for generations to come, we have the obligation to grow. Thank you.

Thank you, Tove. I would like to invite all speakers on stage. Thank you. We are opening up for our second Q&A session, which we were running the same way as before, taking questions from the hall and taking questions from the web at the same time. So just raise your hand when you want to ask a question, and my colleagues will help you with the microphone.

Yes. We have a first question, Aurelio.

Thank you. I actually have 3, if I may. So I'll be brief. The first one is around the margin potential that you see by division, especially in the Food business. Second question is around the ROCE target, why don't you have 1 right now? And the third question is if you could touch on a little bit on the frame agreements that you've discussed in the conference calls, i.e., the size of those where we stand right now in terms of trying to push price increases to customers.

Thank you. Yes, I can start on the margin. I think it was margin expansion in Food. That's what you -- yes. So we are working on expanding the margins in Food. We are not giving specific targets per divisions, as you've seen. So the targets that we are launching today, they are the averages. But a part of the uplift in the margins, as we communicated, is linked to Food. And this is linked to the things I talked about on operational excellence, where we are working on many different parameters. There is no 1 quick fix. It is actually working through different opportunities there. I've been sitting together with the team on the plans that we have. We have very concrete initiatives that will drive this over time, but it will take a few years.

The next question was...

On the ROCE target.

Yes. So this target is now no longer part of our official targets going forward. But I want to emphasize that it doesn't mean that we don't have internal targets on new projects within TOMRA. And I think also, a new project can have a variation, if it's a good target or not, it can vary between the different percentages, right? And I think we, of course, would not go in and invest in new projects, where we don't believe we'll be able to deliver on the overall targets for TOMRA. So I think since we don't give out in the market details about projects as such, isolated, I think it's important -- that is maybe the main factor because you can't measure it from a market perspective. But I think I just want to confirm or just to emphasize that we have good internal targets on new projects, where we don't put them as an official external targets going forward.

Okay. And the last question was around the frame agreements that you have in the Collection business.

Yes. So most markets, we have let's say, control over the price increases. But in some markets, we have more long-term frame agreements without CPI adjustment. Of course, we try to work on that, but there are contractual limitations. So not all will happen this year, some next year and some also early 2024.

Thank you, Harald. The next question, I will take it from the web. Your new targets and overall strategy set out a clear ambition to be a growth company, yet you've maintained a dividend policy that's more consistent with much lower growth businesses. Please, can you talk about the rationale here? And why haven't you taken the chance to reduce the payout ratio and take a greater focus on M&A and organic investment?

I think it must be a great story that we're going to grow and still be able to have a good dividend. No, I think it's better to what Eva said, our core business is a fairly capital-light business. And as we have shown, we are generating very good cash flow from that business, and we expect that to continue. So we believe that we will be able to finance the growth with the balance sheet we have, with the cash flow that we are generating, and develop the adjacent businesses while maintaining dividend. And also, I think the way that the financial market is today, if there are good growth opportunities, I believe that we will be able to get the financing. So we don't really see that as a limitation. [Audio Gap]