First quarter report for the period ended 31 March 1999
- Operating revenues of 504 MNOK (up 52%)
· Europe 207 MNOK (up 65%)
· America 297 MNOK (up 43%)
- Profit before taxes of 80 MNOK (up 67%)
- Launch of four new machines
- Large contracts in Norway
- April 20, 1999, approved investment of USD
5 million in UltrePET, a US plastics recycler
FINANCIALS
Revenues in the first quarter 1999 amounted NOK 504 million, up from NOK 332 million in 1998 (up 52%). The operating profit showed an increase of 54% to NOK 79 million with an operating margin of 15.6%. Profit before tax increased from NOK 48 million in 1q98 to NOK 80 million (up 67%).
Earnings per share increased by 65%, considering an expected tax rate of 34% for the year. Total assets amounted to NOK 1 984 million (up 8%). The liquidity remains good and the equity ratio stands at 67.9%.
MARKETS
EUROPE
Revenues in Europe amounted to NOK 207 million against NOK 126 million in 1997 - an increase of 65% from first quarter 1998.
Norway
TOMRA has received large orders from all major supermarket chains in Norway in connection with the start-up of the new deposit system for cans and non-refillable plastic in May. Installation of machines started mid February and approximately 400 machines were installed during the first quarter. The remaining order backlog for installations during the second quarter is approximately 800 machines. Norway is expected to be the strongest growth driver in Europe for 1999.
Other markets
Sales outside Norway increased by 28% due to continued success in sales of the T-600. Both TOMRA Finland and The Netherlands had a strong start of the year as an effect of specific sales and replacement programs. The German sales growth of 12% was in line with internal expectations and the ambition for the year remains at minimum 20% growth.
Market outlook for Europe
The Board remains optimistic towards the market opportunities in Europe and expects continued strong growth in the second quarter.
AMERICA
Revenues in America amounted to NOK 297 million - an increase of 43% over the NOK 207 million reported in the first quarter 1998. The growth has mainly been generated out of Consumer Collection and Materials Handling services.
The US market developed marginally slower than expected during the first quarter. This was impacted by weather related collections in our Northeast market combined with a 15% decline in average sales price of aluminum compared to first quarter last year.
California
The California legislation covering payment of subsidies, including convenience center handling fees expired December 31, 1998. By the end of January 1999, the legislature decided to extend the previous legislation for another 12 months until new legislation is in place, expected to be effective January 1, 2000.
Plastics Recycling
As a part of TOMRA's strategy to more actively take part in the process of engineering a closed loop, bottle to bottle technology for PET containers, the TOMRA Board of Directors approved today an equity investment of USD 5 million in UltrePET LLC, an affiliate of wTe Recycling. TOMRA's ownership interest will initially be 38.5 percent and will increase to 49% through an ownership buy back program to be executed over 3 years. TOMRA's ownership interest will be treated under the equity accounting method, with effect from May 1, 1999.
wTe is a leading PET recycler and is centrally located in Upstate New York where TOMRA has a strong presence. Fully integrating TOMRA's PET supply stream with UltrePET's operations is expected to yield significant future benefits. For 1999, UltrePET's expects sales of USD 15 million with a pretax profit of USD 1.6 million.
Market outlook for America
The Board remains optimistic regarding market prospects, and expects continued strong growth in the US market.
TECHNOLOGY
TOMRA launched four new machines at the Euroshop exhibition in Germany on February 20, 1999. TOMRA Duo is a new member of the MINIMA product family, targeted towards smaller supermarkets with low volumes. The machine is replacing the former MicroLite and handles cans and non-refillable plastic in the same unit. TOMRA Solo is the second new member of the MINIMA family, handling plastic bottles only.
In addition TOMRA introduced two new machines in the ULTIMA product family for larger volume supermarkets. TOMRA 610 replaces the successful TOMRA 600 with further extended functionality and new design. The machine is the only one in the market that can handle all type of containers.
In markets dominated by refillable bottles there is a need for less functionality towards smaller stores than the T-610 represents. TOMRA 500, which handles all types of refillable bottles in addition to crates, was launched to meet these market demands. The machine was developed and will be produced in Finland.
REPORTING PRINCIPLES
The Oslo Stock Exchange indicated in the 1998 annual outline of Norwegian accounting and reporting principles, that share compensations and options are recommended carried through the profit and loss statement for 1999.
Based on the uncertainty related to the issue, combined with its substantial deviation from international practice, TOMRA has chosen not to follow this recommendation. The recommended treatment would cause significant competitive disadvantages for TOMRA in the longer-term perspective.
During first quarter there were no new compensation plans adopted requiring accounting treatment under this recommendation.
SHAREHOLDERS
The largest shareholders of the company at the end of March 1999 were: State Street Bank (US), 9.8%; Chase Manhattan Bank (UK), 5.5%; KLP (N) 3.9%; Caisse des Depots et Consignations (F), 3.4% and Folketrygdfondet (N) 3.4%. The distribution by country of TOMRA shareholders shows: Norway 35.1%, United States 21.7%, United Kingdom 13.8%, France 5.9% and Sweden 5.5%.
By March 25, 1999, TOMRA issued 147 300 shares to employees at a price of NOK 140 as a part of the bonus program for 1998. TOMRA's share price increased from NOK 250 to NOK 288 during first quarter 1999. The number of shares traded in the period was 12.8 million, compared with 19.8 million in the same period last year.
For full report including tables, follow the enclosed link.
Asker, 20 April 1999 <br>TOMRA SYSTEMS ASA <br><pre> <br>Jan Chr. Opsahl Erik Thorsen <br>Chairman President & CEO <br></pre>