Revenue in RVM Technology amounted to 278 MNOK in the second quarter 2005 versus 301 MNOK in 2004, a decrease of 8 percent. Year-to-date revenue is down 15 percent. The decline in operating profit is primarily due to lower sales and restructuring charges of 46 MNOK.
The acitivity is lower in Finland and Sweden, but the activity is increasing in Denmark. Several new store openings have positively impacted technology sales in Denmark, which is expected to continue in the second half of 2005. Based on new legislation in Holland, deposit on non-refillable containers equal to or larger than 1.0 liters will be implemented as of 1 January 2006. The new legislation is expected to impact TOMRA`s operations positively in the second half of 2005, and TOMRA has so far received orders for more than 100 new machines.
DPG Deutsche Pfandsystem GmbH (DPG) was recently founded to establish and administer a national deposit system for nonrefillable beverage containers in Germany. An important pillar in such a system is the security marking of deposit containers. DPG has signed a pre-contract with Bundesdruckerei GmbH to deliver such a security solution. TOMRA is Bundesdruckerei`s partner and technology supplier in this project.
US East & Canada
Revenue measured in NOK increased by 3 percent to 92 MNOK. Machine installments under the previously announced 6.5 MUSD contract with a New York-based retailer positively impacted the second quarter 2005 performance.
Collection & Materials handling
Revenue measured in NOK increased by 3 percent to 210 MNOK. The increase in revenue was mainly driven by growth in the collection operations. Margins also improved in the second quarter 2005 compared to 2004 due to improved performance in California. Strong recovery in Recycling Technology from first quarter 2005 Operations within TiTech and Orwak Group improved considerably in the second quarter 2005 versus a very weak first quarter 2005. TOMRA anticipates improved performance during second half of 2005 versus first half 2005 based on a sound order backlog at the end of the second quarter 2005.
Activities initiated to divest Brazilian operation
As part of its on-going strategy discussions, TOMRA has decided that the Brazilian operations are out of strategic scope. As a consequence, activities to sell the Brazilian operations have been initiated.
TRC pilot in the UK
TOMRA installed an additional two TRC`s in the UK, bringing the total to three centers. Another three centers are scheduled for installation in July and August 2005. An evaluation of the TRC business model performance will be conducted in the fourth quarter of 2005.
In the second quarter 2005 Sumitomo has successfully sold two RVM-based recycling centers in Tokyo. The technology and concept continue to be well received. Decisions by municipalities to invest in recycling centers in the fall of 2005 are key factors in the further development of the Japanese business model. The partnership with Sumitomo is important in this respect.