Tomra Systems A/S/A S/Adr

Good morning from Asker, ladies and gentlemen, and welcome to Tomra's fourth quarter result presentation for 2025. My name is Daniel Sundahl and I'm Head of Investor Relations. As usual, Tove Andersson, our CEO, will start today's presentation by giving you the highlights and afterwards CFO Eva Saganbo will dive deeper into the numbers and give you the updated outlook. And after the presentation, we will open up for Q&A for participants in the team's webinar. The link to it can be found in this morning's Stock Exchange release. We aim to conclude the presentation around 8.40 today. But without further ado, I give the word to Tove Andersson.

Thank you, Daniel, and also welcome from me to our quarter Q4 2025 presentation. We present today a strong final quarter in a year that has been characterized by volatility and market uncertainties. In collection, we report a record quarter, record revenue and record EBITDA, and we have seen that the rollout in Poland and Portugal is stepping up. Recycling, we are presenting a good quarter in a year that has been a weak year due to the challenging market sentiment. And in food, we are seeing the results of the improvement initiatives and an improving market sentiment, and we deliver a strong quarter, which also then makes 2025 a record year regarding profitability in the food segment. Let me then give you an update on the different divisions and our Horizon portfolio. I start with the collection. In collection, we have had very good sales in existing markets in the quarter. As many of you know, we have a strategic ambition that we should grow our existing markets with 5% annually. And in 2025, existing market represented 87% of our sales. In this quarter, we saw particularly good growth in continental Europe, partly then driven by our new innovations. And one of those are our multi-feed machines, the ones where you don't need to put one and one bottle into the RBMs, but you can just drop a whole bag of bottles into the machines. And we did increase our installations of multi-feed machines with 50% in 2025. and we have roughly now 1,100 multi-feed machines installed. Also in the quarter, we saw then installations in Poland and Portugal slowly picking up. We delivered 1,000 or installed 1,000 reverse vending machines in Poland in Q4. And if you look at the picture top right here, that is a picture from Poland. This is our S2 machine that we developed specifically for Poland. It's an outdoor machine. And as you can see from the picture, it can endure Cold weather, snow, rain, and also warm weather. And a significant portion of what we are installing in Poland is this machine. But also, as this picture illustrates, it's been quite a challenging period to install outdoor machines in Poland. And I'm very impressed by our service technicians and installation people that they've been able to install so many machines despite snowstorm and really bad weather. End of last year, we had roughly 2,600 machines installed in Poland, and we are currently installing 100 machines per week. So we have roughly now 3,000 reverse vending machines in Poland. Also in Portugal, we are then stepping up installation. We installed around 300 machines in Q4, making then end of the year an installation base of 500 machines in Portugal. And today we have roughly 700 machines in Portugal. But there is still much left to install. In Poland, as we communicated before, the first phase with the large retailers represent 10,000 to 12,000 reverse vending machines. And then we expect a significant tail, which could be 5,000 machines or even more. So we do expect that we will see a similar tail as we have seen in, for example, Romania, where we have been continuing installing machines still now, so late after they go live. So actually, our install base in Romania in last year grew with 20%. Also, we have seen similar things in Hungary, where our install base in Hungary last year, 2025, increased with 30%. Another highlight is that we have been appointed as a return point network operator in Singapore as 103 with a minimum installation of 350 RVMs. And we are very excited and looking forward to work with BCRS, which is the system operator there, to make this a successful launch of the first deposit system in Asia. And then, of course, this year an exciting thing is UK. UK will go live with the deposit scheme in November next year, November 2027. And we are seeing significant commercial activities there. So many of the large retailers have already published an RFP, and we expect others to do it shortly. So we believe a lot of the contracts will be signed this year, but we expect most of the installations then to happen in 2027. Also in the UK, there has been questions about if it's the whole UK that will go live next year or if Wales will not be part of it. And there was some positive news that came out yesterday. So it was a press release that the deposit return scheme for drinks containers in Wales, the regulation had been laid to the parliament. and it was then stating that they have now an agreement with UK where the debate has been around glass and that they now are planning to go live also then on 1st of October. Still needs Senate approval but it looks like everything is set up now for that the whole of UK will go live and late next year. In addition to that, as always, we have included on the slide here the different countries. I'll give a short update on the ones that I haven't commented upon. Greece was supposed to go live late last year. It has been delayed, and there is not communicated yet a new start date. Moldova has announced that they are going ahead with the deposit scheme with the latest startup in January 2027. And in Spain, we are waiting for the scheme operator to be appointed. There was an expectation that that would happen late last year. It hasn't happened. And we are now seeing when it's going to happen. If it doesn't happen before May this year, there might be one year further delay. And you can expect that after a scheme operator is appointed, it takes one to two years before the scheme goes live. But overall, no question about if, it's really about when. And of course, the underlying picture here is the targets that are part of the single-use plastic directive and the packaging waste regulation that all EU countries needs to meet the collection targets in 2029, which means that they will need to implement a deposit system. Then over to recycling. I want to start with that we really believe in the long, mid to long term picture within recycling. The way that we are utilizing our resources today is not sustainable. If you look at all resources we use annually, less than 8% is circular. So this needs to change. And most waste streams comes as a mixed waste stream, which means that you need to have automated sorting to enable this at scale. However, currently, we do see a weak market sentiment, especially within plastics and waste in Europe, but also in the Americas. This is driven by low plastic prices. It's driven by that the new targets are not really kicking in before 2030, because in Europe, we have the packaging and the packaging waste regulation with the targets for 2030, which then to be met, you need to at least double the infrastructure in Europe. And it's also in Europe, the reason for weak market sentiment is import, cheap import from Asia. And it's positive to see that the EU recognize the challenges that the plastic recycling industry in Europe has and are facing, and that last week they passed what they call a winter package, a circularity winter package, which is about how to implement a single-use plastic directive, especially then how to calculate for the recycled content, saying that if you are going to include recycled material to meet the recycled content targets until late next year, November next year, it needs to be sourced from the EU. And after that, there needs to be mirror clauses, which means that the imported material needs to meet the same strict regulations on environmental health and waste management as in the EU. So it's good to see that there are some movements there to secure that recycling industry in Europe. However, we don't expect then a short-term recovery. We don't expect a recovery in this market this year. And we'll see then what will happen next year. So that's why we had to take measures to ensure that we are regaining our profitability at the levels we want it to be. Our revenue for 2025 is 18% down versus the year before and we really need now to adjust and right-size our organization to meet the current market sentiment. So that's why on Wednesday we informed our employees in recycling about the cost reduction initiative. The objective of that initiative is to take us back to an EBITDA percentage above 20% as soon as possible. we will take out 16 million euros our cost this will then have a full effect from next year 2027 and it represents approximately 175 positions and also we will work on optimizing our global footprint and the supply chain and the objective there is really to use this opportunity also to look at our organizational setup so that we have a more scalable global operations going forward Then to food, very good year for food last year. We really now see the impact and the effects of the improvement programs that we have put in place to cut costs, but also to drive customer-facing commercial activities. At the same time, we see now a positive market sentiment in many categories. But we're also now much more well-positioned to take a significant part of that improved market sentiment. So we are then also ending last year with a very strong order backlog with large orders to be delivered this year. Also good to see how the profitability has improved significantly. And as I said in my introduction, we have the highest profitability, both in absolute and percentage term, ever in our food segment. But also as part of our improvement initiative in food, we have worked a lot on our innovation agenda and our innovation roadmap. And we believe that it's crucial to maintain our good margins and to gain market share in the core categories that we are focusing on. So we have a pipeline of initiatives where we will then gradually launch new products. And last week, we launched our new blueberry machine. So this is 5S spectrum with LUCA, which means it has built in our deep learning AI algorithms. Blueberries is a very important segment for us. It's a segment that is growing because of increased consumption, so there's increased planting areas coming. And when you have that, you also need the infrastructure to pack and sort those blueberries. And this machine, which I think looks amazing, and it's a very cool machine, and it's very well received in the market, it's about really increasing the throughput. Speed is always important. It's making sure that we spread the blueberries well, that we have less bad materials staying in what is sorted out and the opposite. And actually, this machine, per second, you can take 385 blueberries through it. So speed is very important. Very well received in the market, and we have already received orders for it. But it's a good illustration of also how we are constantly working now to keep our technology leadership to generate value going forward. Then to Horizon, Horizon is then our portfolio of business building ventures as we call them, where we are leveraging our competence and technology to build new businesses to create value going forward. Seatrace is the company that we acquired a bit more than a year ago, which is then within smart waste management. Very happy with the performance of SeaTrace last year. They delivered according to our expectations with double digit growth and EBITDA above 20%. Reuse is our venture for solving the problems with takeaway packaging and single-use packaging at events and festivals. Last quarter, we had two pilots of our event solution, both the one in Oslo at the utility area arena and then at the fairground festival in hannover and you see the picture bottom left here from hannover very cool solution where we are providing a technology solution where you have a bar plate so when you buy the beer in their reusable cup it's automatically automatically matched with your payment method after you've been drinking you just throw it through a hole you can even take all your friends cups together with it and throw all of them and they will automatically be identified with your payment card so you get the money back for the deposit. Very good feedback on this solution and we are working now really hard on then a scaling plan for that. Feedstock is the venture where we are focusing on solving how to divert plastic from ending in landfill or in incineration. We have invested in one plant in Norway there, Omro, and we had a very good start to the operations in last quarter and we ended then 2025 with a positive EBITDA run rate. Ramping up now to two shifts. We also have had the German plants in construction and we have decided that we are putting the remaining investments of the German plant on hold due to the current market situation. And we rather want to utilize the flexibility we have to find an optimal setup of our assets in order to deliver their value in our offtake agreements which has previously been announced. For feedstock, we are planning to have a positive EBITDA contribution in 2027. So that concludes my update. And as I said in the beginning, we end the year with a strong quarter, showing that even in a year marked by volatility and market uncertainty, Tomra's strategic foundations are strong, and we are exceptionally well positioned for the growth cycles ahead. With that, I hand over to Eva.

Thank you, Tove. And let's start with the group P&L for the fourth quarter. The fourth quarter ended at 382 million euros, down 4%, compared to a very strong Q4 last year. Collection ended up 2% compared to then a strong Q4 last year. Recycling down 27%, but in line with the conversion ratio that we estimated for the quarter. And food down 3%, however strong, delivering above the estimated conversion ratio. If we look at the full year revenues, the revenues came in in line with last year, adjusted for currency effects. Gross margins ended at 46% in the quarter, in line with Q4 last year. Looking at the OPEX, we have strong cost control across our divisions in the quarter, with OPEX of 105 million euros. That is slightly up compared to Q4 last year, where most of the increase is sustained by high activity, adding in clink and also inflation in the year. When we look at the EBITDA, that results in an EBITDA adjusted of 71 million euro and an adjusted EBITDA margin of 19%. And then looking into collection, revenues came in at 207 million euros, that is 2% up compared to a very strong Q4 last year. In Q4 last year, we had the strong sales from Austria preparing for its DRS, while this quarter sales has come in from new markets such as Poland and Portugal. In 2025, existing markets have delivered well in line with our target of 5% annual growth, resulting of then 87% of total revenues this year is stemming then from our existing markets. And when we look at the contribution from a new market that includes Poland, Portugal, Romania and Austria. And for gross margins in collection, they have delivered a strong gross margin of 42% in the quarter, but also in the year, compared to last year 41%. And the gross margin in the quarter has been positively impacted by business mix, but also release of warranty accruals. as i said good cost control in our divisions also for collection with opex of 47 million euros in the quarter down compared to q4 last year that gives us an ebitda in the quarter of 39 million euros and an ebitda percent of 19 percent And we talk always about the ramp up cost in collections for the year and then for full year 2025, the ramp up cost has been north of 20 million euros in collection. And then looking at the recycling results, the top line came in at 75 million euros. That is down compared to a very strong Q4 last year, but in line with the conversion ratio that we estimated for the quarter. And as you can see from the overview, the weak performance continues in our biggest markets, being Europe and North America, explained by the challenging market sentiment both in the plastic segment in Europe, but also in the waste segment in the US. Gross margin ending at 52% in the quarter, that is reduced compared to Q4 last year, however improved compared to previous quarters this year, explained by the product mix and the segment mix in the quarter, being more waste orders and that we have sold out of sort machines in the quarter. and we are taking measures on cost in recycling and with that we have had 1.2 million euros as a restructuring cost in the quarter if we look at the opex it ended at 19 million euros which is slightly up compared to q4 last year but it's down compared to previous quarters this year That results in an adjusted EBITDA of €21 million in the quarter for recycling and an EBITDA margin of 27%. And as always, we look into the order intake and that has continued weak also this quarter, explained by the market sentiment. And the order intake was down 20% compared to Q4 last year, resulting in an order intake of 61 million euros. And that results in a declining order backlog, declining 12% compared to end of last year. And when we look at the trailing 12 months, recycling is down 25% on the order intake. Moving over to food, food came in strong at 88 million euros on top line. That is down compared to last year, 3%, but higher than what we estimated on the conversion ratio. We have seen especially a strong quarter in the rest of the world and a decline in Americas. But if you look at the full year, all markets have delivered solid performance in 2025. Gross margin ending strong at 52%. It's significantly up compared to Q4 last year and historically the strongest that we have had in food. And the strong margin is a result of a combination of the full year cost savings effect, but also a positive product mix and release of warranties and tariff accruals. If we look at the OPEX, it ended at 29 million euros, which is then flat compared to Q4 last year. And as a result of the strong gross margin in the quarter, EBITDA ended at 18% in Q4, resulting then in a record EBITDA margin for the year of 13%, which is then an overachievement of our target of 10 to 11% EBITDA for the year. And also here looking into the order intake and for food, we have seen a continued positive momentum in the order intake throughout the year. We are up 2% compared to Q4 last year, ending then at 86 million euro. And as I said, all regions have delivered a solid performance and we see especially an uptick in the citrus category this year. The order backlog was up then 26% compared to Q4 last year, ending then in a backlog of 136 million euro. And also here, when we look at the trailing 12 months of order intake, it's up 12%. Still a solid balance sheet for Tomra end of the year. And if we look into the cash flow for the quarter, it ended at 24 million euros. It's down compared to a very strong cash flow from operations in Q4 last year. And that is explained by timing effects of customer payments and release of contract liabilities. And that's also something that you can see in the cash conversion cycle for the year. Equity ended at 35% and the gearing at 2.3 and our ROKI ended at 15.2% ending 2025. Looking at the financial position, it's a nice spread of our debt maturity ending the year at 4.2 years in average and then we had undrawn facilities of 54 million euros ending 2025. And moving over to the outlook and starting with collection, as always, we mentioned that it's a high activity related to deposit return systems in new markets, but also growth in existing markets. And the short and mid-term performance will, of course, depending on the timing in the new markets, but also the activity is happening in the existing markets. And when we look at 2026, we need to separate the growth expectations into what is coming from existing markets and what is coming from new markets in collection. And starting with the existing markets, we expect revenue growth at mid single digit annually on average, which aligns with our strategic ambition for this division and also what we have delivered in 2025. And then for new markets, we expect Poland, Portugal and Singapore to contribute with approximately 100 million euros from current orders. And on top, as Tove said, there is an attractive tail in Poland, similar to what we have experienced in Romania with independent stores. representing then a total market opportunity of approximately 5,000 machines or more, where we already have a dozen preferred supplier agreements at hand. However, the timing of sales into this segment can follow a trend as what we have seen in Romania, meaning that the revenue will come over a period of time after the market has gone live. Another new market activity worth mentioning is the ramp up of volume in Tasmania, as well as continued contribution from Romania and Austria. And in addition, we will have the full year effect from Klink, the company that we acquired in September in 2025, expected to come in at around 25 million euros in revenues for 2026. And then for gross margins in collection, it should continue to stay above 40%, but the quarterly variations may occur depending on the sales mix between the quarters. meaning in quarters when we sell more equipment the gross margin will be normally lower. We expect a continued good cost control in collection. However, we might have OPEX variations between the quarters, depending on investments into new markets. And when it comes to investments into new markets, this is where the ramp up for OPEX run rate comes in. And we estimate that to be at around 20 million euros for the full year. So the same level as we have had in 2025. And then over to the outlook for recycling. And as Tove mentioned, despite the belief in the strong long-term drivers, like regulation and the demand for recycled materials, the market is currently facing challenges. And as a result of that, timing of orders in recycling is uncertain. And this challenging environment is expected to continue throughout this year and then possibly into 2027. And we have taken measures to restore our profitability already announced this week, where the target is to come back to an EBITDA margin above 20% as soon as possible. And with the cost savings program that we have announced, we target to save a gross 16 million euros as an annual run rate. And that will have a full effect in 2027. And the cost of that will be approximately 15 million euros. And the cost saving will be approximately one third in COGS and two thirds in OPEX. And we expect the savings to be gradually implemented in the year, so more towards the end of 2026, as it takes three to six months to execute on the programme. And that means that we will have approximately 50% of the savings as an effect in 2026. And then looking into the coming quarter, we estimate a conversion ratio, 40% of the backlog as revenue in Q1. And with the market uncertainty, it's important to mention that there is a risk that orders may be postponed over quarters for recycling. and as we know volumes and product mix impact the gross margin in recycling and in 2025 we have had lower volumes than previous years and in combination with a higher share of metal orders being delivered delivered these two factors impacts the overall margin in in 2025 and then looking into q1 and the conversion ratio that we now have indicated of 40%, the volumes are estimated to be on the lower end and in the combination with product mix in the order backlog, this will have an impact on the margin for recycling. And for food, the outlook in food here, the drivers are the automation and higher standard for food quality and safety, and that creates new opportunities for our business division food. And although the market has now normalized, macroeconomic uncertainty may still influence customers' willingness to invest. Food growth revenue growth for 2026 is projected to reach mid to high single digits. And looking into Q1, we estimate a conversion ratio of 55% based on the order backlog ending the year. And then the restructuring and cost reduction program has improved the gross margins in food. And in 2025, the product mix that we have sold less third-party equipment in addition to release of accruals have impacted the gross margin positively. And for 2026, we expect the gross margin to remain in the mid 40s based on project and product in the order backlog. However, we might see quarterly variations dependent on volume, business and product mix. And we have delivered a robust EBITDA margin of 13% in 2025, which is ahead of our ambition to reach a mid-teen target by 2030. And for 2026, we expect maintaining strong performance in food with an EBITDA margin of approximately 12%. And why 12%? The outlook builds on the positive momentum from 2025, but we anticipate changes in the product mix and an increase of third-party equipment sales, especially given the large orders that we have in the order backlog that is going to be delivered into 2026. And then over to Horizon and the outlook that is where we have the venture activities feedstock and reuse and also seed trace. And seed trace have delivered a strong year in 2025 with the double digit growth in EBITDA above 20% and which is then projected to continue into 2026. And for Feedstock, it's all about ramping up the capacity at Områ, where we plan to increase it to now two thirds of full capacity. And we expect a positive EBITDA contribution in 2026 from the Områ plant, given the successful capacity ramp up and also current market prices. And then, as Tove said, a positive EBITDA in 2027 already. And then with the underlying OPEX for feedstock and reuse for business building, that is expected to remain in line with 2025 levels, but we will have an increase in costs related to områ, with ramping up områ and also seed trades due to higher activity levels. So the OPEX run rate estimated for Horizon as a total is estimated to be around 40 million euros for the full year 2026. And then lastly, on capex, the total capex for the year is estimated at approximately 100 million euros. And that will be primarily directed towards our core divisions, meaning collection, food and recycling. And we do not expect large capex investments into Horizon, explained also by the remaining investments in the German plant. The feedstock plant is now put on hold. So with that, I think we end on the financial side, Daniel, and can move into Q&A.

Thank you, Eva, and thank you, Tove. We will then take questions. Please try to limit yourself to one to two questions per turn. And I see that we have a few questions coming in. The first one coming in from Elliot Jones at Danske Bank. Please go ahead, Elliot.

Yeah, morning, guys. Congrats on the results this morning. Just a couple of things for me. On collection, yeah, you mentioned this in the outlook that kind of orders equate to 100 million euros in sales for 2026. And I like that it's just current orders that you've received and maybe obviously more to come from Poland alone and the others. But can you just help us understand kind of in general, what the time lag is between, you know, you receiving orders and then being able to kind of deliver them just on a general basis?

Yeah, on a general basis, I think we need to discuss more specific for Poland, right? Because as Tove said in her note on collection is that we have an installation plant for Poland with 100 machines per week and that's kind of like the the phase that we are now working according according to and as you know we announced contracts during the fall and that's what we are now delivering according to and it's included in the 100 million euros revenues on the current order base so that includes poland portugal and singapore

And if I can add, so also what we said, you know, is that in Poland, we expect deliveries on the existing contracts first half of this year. And as Eva said, we have a dozen of frame agreements with the smaller retailers, which means that the frame agreement is there. So it's just a call-off, and that can be very quick. So a retailer can just order a machine, and it can be delivered, you know, a few weeks later. So on those, you have a very quick turnaround.

Got it. And then also just a question on operational leverage in collection. Yeah, if you kind of look back all the way to kind of Germany, I know that Tomra kind of had an OPEX base that was able to be stable as revenue started to take off. And obviously you've just made comments on ramp up costs this year being north of 20 million euros as in 2025. You say 20 million euros in 2026. So I just want to kind of test beyond 2026 when there's more new markets coming. How do you stand with regards to that? Do you expect any big jumps in OPEX or would you say that along the way you have been investing in regions such as France and Italy and the like already?

First of all, we're doing quite a bit now on structuring Europe in a good way. In the collection, we just reorganized the whole region to make sure that we are really set up to run that efficiently as new markets are coming along. on the kind of backbone, the operational backbone, the supply chain, procurement, production, et cetera, is well set up to handle then the growth. But what you have to expect that each time a new market comes, we need salespeople on the ground. We need service people on the ground. So, of course, there will be some OPEX coming in in every market. But at the same time, we are working on ensuring that we have as much operating leverage as we can.

OK, thanks a lot, guys. Thank you. And the next question is coming from Adela Dashian at Jefferies. Please go ahead, Adela.

Thank you, Daniel. Good morning, everyone. Yeah, if we firstly could start on collection, I appreciate the guidance of 100 million revenue contribution in 2026 from the newer markets. But when I plugged that into my model, I still have a difficult time getting up to double digit growth rates for the full year for collection. Given that existing markets are growing by by mid single digits. So could you just explain if you and I guess also with UK now not coming live until late 2027? Could you explain like what's the how you will achieve double digit growth, which is what consensus is assuming right now?

So as Eva explained, we are from the existing contracts in Poland, that is the large retailers with existing contracts, the contracts we have in Portugal and Singapore that represent 100 million to be delivered and most of that in the first half of this year. Where we land the year will then depend on additional sales into these markets and additional sales into Romania and Austria.

I see. Okay, so it's just based on those confirmed orders. Okay, it makes sense. On recycling, I'm assuming that there was no, it was a quite nice beat versus expectations, but I'm assuming that the restructuring effects, I mean, it's very, very recent, these were announced, so no effect of that in Q4. So could you explain, was it a sequential better mix as well that drove the... the results in the quarter, and also under a structuring cost, what should the facing be in the quarters.

I'm not sure if I got the first question, Adela, but I can answer the other one and then maybe Tove can fill in if she got the first one. So on the restructuring cost, it's estimated to come in in Q2 and Q3 at large, of course, depending on how this restructuring program will go into effect in the year.

And we had one million in restructuring cost in Q4. So that was the only effect in Q4 from the restructuring.

And on recycling, the mix that we delivered was more normalized into waste. But however, the order backlog still has a higher share of metals in it to be delivered going forward.

Okay, I see. Thank you so much.

Good. Okay. Thank you, Adela. The next question will come from Fabian Jurgensen at Pareto. Please go ahead, Fabian.

Thank you. All right. If we talk Spain and UK facing, Spain is obviously a bit more uncertain. We say that the RFPs for UK have already started. Spain is a much more consolidated market than, for example, Poland, Romania, where you have the long tail. And when do you expect the capacity to be all rolled out in the UK? Is this a play where you expect most to be in place by October, meaning that sales could start in late 2026? And how should we think about that?

So we expect that the UK start will be a hard launch. That's the current expectation. You know that in Poland we had a soft launch. They had the three months grace period. We don't expect that to happen in the UK. It can change, but at least that's what is communicated, which means that you should expect a significant portion of the installation to happen before the go light date.

Exactly. OK. And so I think one of the most important things to note in the report is the margins here. Food was obviously very great again, similarly to Q2, but also on collection, you state that the added cost for 2026 is very limited. And if you look at consensus estimates now, what they basically assume for 2027 is that OPEX in collection expand 30 to 40% relative to 2025. Is that way too high?

So on the OPEX for 2027, that's down the line, and we need to come back to that at a later point, Fabian.

What we have said is that... Does it make sense that it's up 30%?

It depends. I think so. Yeah, I think the level of the OPEX depends on the activity in the markets, right? So what we are working according to is to have good cost control in collection and across the divisions that we have. And then, of course, a large part of TOMA collection is related to existing markets. And then for new markets, we manage the activity going into new markets in a very prudent way. So a cost will, of course, occur with going into new markets, but the levels we need to come back to.

Okay, cheers. Thank you.

Thank you, Fabian. And the next question is coming in from Moraya Desina at Barclays. Please go ahead, Moraya.

Morning, guys. Thanks for taking my question. Just one from me just to follow up on the product mix in recycling. And so I know that there was some softness in the waste recovery segment of recycling in 2025. Are you now saying that we're seeing that coming back, especially in the US? I know that there was some sort of effects from the geopolitical backdrop. So I'm just wondering where we're at on that.

Yeah. Not necessarily. So what we see in the quarter is a result of what we had in the order backlog for the year. And in Q4, we had more waste projects to be delivered to the P&L. So that's the reason we don't necessarily see a recovery in the waste segment because of that.

Okay, that's clear. Thank you so much.

Thank you. And we will take two final questions. One from Marcus Heiberg at SEB. Please go ahead, Marcus. You're still muted, Marcus.

Do you hear me now?

Now we hear you.

Oh, sorry. So, a two-part question on the competitive position in recycling. So, the first one is, how do you see the competition there now, as the market is softer and plastics are seen higher competition and and also maybe in metals are you seeing any any changes there and the second part of that question is now as you're downscaling or your cost base are you seeing that impacting your own product roadmaps and i i imagine there are some opportunities there in in ai and and what's happening there um so so some discussions on that will be interesting

Yeah, so first of all, it's clear that our competitors are experiencing exactly the same as us. So we are not losing market share. It is the market that is down. But that also means, of course, it becomes very competitive on the orders that are out there. So in a situation like this, yes, there are pressure on margins, but we are still, you know, I feel in a very good competitive situation versus the others. What we are doing is right-sizing the organization. We have reduced turnover with 18%. We are not 100% sure when it will come back. It will come back, but when it will come back, so we need to take down our organization to meet the current market sentiment, which means that we are reducing all over in recycling, including that we are reducing on some of our innovation activities because also we see that the market will not be there to take those innovations and we can get really valuable with short term. At the same time, we have been very focused on making sure that we don't take out things that will make us less competitive when the market comes back. So this is, of course, a balance. So we believe that we have the balance right, which means that we are still investing into our innovation portfolio, including AI with the new organization or the new manning that we will have them as of mid this year.

Thank you. Thank you, Markus. We had one last, but no longer in the queue. So I think with that, we have reached the end of today's presentation. Thank you very much for tuning in. The next time we will be here is on the 24th of April for our Q1 results today after AGM. Looking forward to seeing you then. Until then, have a nice day and goodbye.