Introduction#

Tomra Systems ASA is banking on upcoming European regulations and advanced sorting technology to revitalize its recycling division, which has faced significant challenges recently. Daniel Sundahl, the company’s head of investor relations, shared insights on this strategy.

Declining Recycling Margins#

The recycling sector has seen a sharp decline, with profit margins dropping to 11% in 2025 from over 20% in previous years. This downturn is attributed to low plastic prices, inexpensive imports from Asia, and trade uncertainties that have caused customers to postpone orders in Europe and North America. As a result, revenue in the recycling unit fell by 18% over the year, leading to a cost-cutting program that will impact around 175 jobs, with full savings expected by 2027.

Future Growth Potential#

Despite these challenges, Tomra is optimistic about future growth. Sundahl noted that revenues had previously grown by 19% annually from 2020 to 2023. The company is targeting double-digit growth in the recycling sector through 2030, supported by a robust regulatory framework. Notably, the UK’s deposit return scheme is set to launch in November 2027, with Wales also proposing similar regulations.

EU Regulations and Market Opportunities#

A significant driver for Tomra's growth is the EU’s Packaging and Packaging Waste Regulation, which mandates that all member states implement deposit schemes for plastic and metal containers by 2029. This creates a legally binding timeline for major markets like France and Italy. Sundahl emphasized that this regulatory momentum offers strong long-term visibility for the company, although he acknowledged that political and economic factors could influence progress.

Diversification and Profitability#

In addition to recycling, Tomra’s Collection division is increasingly focused on services, which now account for over 60% of its revenue. Meanwhile, the Food division achieved record profitability in 2025, with EBITA margins exceeding targets. Furthermore, Tomra has been appointed as one of the operators for Singapore’s first deposit scheme, presenting an opportunity to showcase its model in new markets across Asia.