| HIGHLIGHTS 3rd QUARTER
- Revenues of 498 MNOK (up 40%).
- Profit before tax of 80 MNOK (up 32%).
- Letter of intent to acquire Mobile, California
- Halton activities in Austria acquired.
FINANCIALS
Revenues in the third quarter 1998 amounted to 498 MNOK, up from 355 MNOK in 1997. The operating profit for the quarter increased from 70 MNOK to 87 MNOK with an operating margin of 17.6%. Profit before tax increased from 60 MNOK to 80 MNOK. Financial expenses of 4.6 MNOK include 4.0 MNOK of currency related expenses while Wise Recycling contributed 3.0 MNOK of profit under the equity method.
Sales for the first nine months totaled 1 241 MNOK against 850 MNOK in 1997 (up 46%), while the operating profit rose from 161 MNOK to 214 MNOK (up 33%).
Earnings per share had a growth during the first nine months of 33%. Total assets have increased by 22% since the beginning of the year to 1 721 MNOK. The liquidity remains good and the equity ratio stands at 70%.
MARKETS
EUROPE
Revenues in Europe amounted for the first nine months to 426 MNOK against 372 MNOK in 1997 - an increase of 15% from the same period in 1997. Sales in Europe have developed slower than expected during the first nine months. TOMRA`s market position has not been changed.
Denmark
Denmark has responded to the invitation from the EU Environmental Commissioner and decided not to open the market for one-way containers. The current positions might lead to a long lasting process in the EU court.
Austria
In order to conclude the TOMRA - Halton integration process in Europe, TOMRA decided effective October 1, 1998, to buy back the Halton distributor rights from Topercher GmbH with a remaining 3 years term. Halton`s market share in Austria is approximately 40%. The agreed compensation amounts to 6.4 MNOK.
Market outlook Europe
The Board remains optimistic towards the market opportunities in Europe, but expects continued slow growth for the remainder of the year.
AMERICA
Revenues in America for the first nine months amounted to 815 MNOK - an increase of 71% over the 478 MNOK reported in the same period 1997. Organic growth represented 33%. The growth has mainly been generated in material handling and services.
Wise Recycling
The Wise Recycling equity investment was completed in August with effect from July 1, 1998. TOMRA`s equity earnings from the venture for the third quarter amounted to 3.0 MNOK reported under `Net financial items`. The business is developing positively with operating efficiencies being realized. The venture has also taken over marketing and management of TOMRA`s aluminum commodity.
TOMRA Metro contract expansion
TOMRA Metro has recently extended all major retailer Reverse Vending leases for a minimum 5 year term. Early extension of the leases was tied to planned introduction of couponing in the New York market during 1999.
California
Two new major market developments in California have resulted in TOMRA becoming the largest convenience center operator. The first being that TOMRA entered into a long-term exclusive contract with Ralph`s Supermarkets to provide convenience center services. Ralph`s is California`s largest retailer and the contract provides for services for a 5-year period for over 170 sites.
Most recently, TOMRA signed a Letter of Intent to acquire Mobile Recycling Corp. Revenues for Mobile are 12 MUSD annually with a pretax profit of 1.5 MUSD. The purchase price is 7.5 MUSD with an additional contingent payment of 2.1 MUSD based on performance.
The current Californian legislation controlling payment of subsidies, including convenience center handling fees, expires December 31,
1998. The new legislation was vetoed by the outgoing Governor of California on September 30, 1998. The legislature will reconvene in December. We expect that the legislation either will be resubmitted to the outgoing Governor or held until January for the new Governor.
TOMRA`s rapid expansion in California will permit significant operating efficiencies when combining the most recent market developments with our earlier Reynolds and Recycling Resources acquisitions, and expect operating margins to improve substantially during 1999. Our strong California presence also provides an excellent base to introduce new service concepts incorporating reverse vending technology in 1999.
Market outlook America
The Board remains optimistic regarding markets prospects, and expects continued strong growth in the US market.
SHAREHOLDERS
The largest shareholders of the company at the end of September 1998 were: State Street Bank (US) 9.4%; Chase Manhattan Bank (US) 4.9%; Chase Manhattan Bank (UK) 4.2%; KLP (N) 3.7% and Deutsche Bank 3.5%. The distribution by country of TOMRA shareholders shows: Norway 30.2%, United States 23.6%, United Kingdom 13.6%, Germany 6.5% and France 6.5%.
TOMRA`s share price decreased by 32%, from NOK 230 to NOK 155, during third quarter 1998. The Oslo Stock Exchange Index decreased by 31% in the same period. The number of shares traded in the first nine months were 53 million, compared with 42 million in the same period last year.
Asker, 13 October 1998
The Board of Directors of
TOMRA SYSTEMS ASA
Jan Chr. Opsahl
Chairman
Erik Thorsen
Group President & CEO
Full quarterly report is ready for download on http://www.huginonline.no/TOM/DR/tom98k3_eng.pdf |
