Hello, everyone. Welcome to our quarterly results presentation. My name is Georgiana Radulescu. The presentation is live from our headquarters here in Asker, Norway. You have the possibility to ask questions by using the Q&A tool which is embedded in the webcast. Because there is a small lag between the presentation and the webcast, we encourage you to send your questions during the presentation, and we will address them towards the end. With those being said, I will give the word to Tove.
Good morning and good afternoon, everyone, and thanks for joining our webcast. It's a great pleasure for me to present another good quarter for TOMRA, a quarter where we then report record high revenues and EBITDA. In the quarter, our revenues were NOK 3.05 billion. This is up 16% versus the same quarter in 2020. We saw good investing more in future-oriented activities as we are ramping up to address new segments and markets. This resulted in an all-time high EBITDA of NOK 535 million. We also had a strong cash flow from our operations in the quarter of NOK 658 million. Our order intake were up 6% to almost NOK 1.3 billion.
Slovakia went live with a new deposit return scheme first of January this year, and we did ramp up our activities then second half of 2021, both building an organization and then installing RVMs in the retailers. A few key facts on the Slovakia DRS system. It's approximately 1.3 billion containers. We have had the activities linked to ramping up in Latvia. Latvia went live with the deposit return system now first of February. We were then in Q4 last year establishing the organization, also installing equipment in the market. Latvia is a throughput model, which means that the income side or revenue side from operating that market will only materialize in this year. It'll be August 16, 2023.
In Victoria and Tasmania, there are processes now to prepare their DRS system. We expect that to be implemented during 2023. When they have implemented DRS, Australia will be then the first continent where you have DRS in all the states of the continent. Connecticut is also looking at upgrading their existing system. Q1 was the launch of our deep learning application in the wood sorting segment. We have been selling equipment into wood sorting for more than 10 years. We have had the technology where we are separating inert material like stone and glass from wood. However, what we have developed now is really a deep learning algorithm that is then an add-on to our flagship product in this segment. Wood fractions into different qualities.
For example, we can sort out unprocessed wood with processed wood. Why is that important? For example, if you want to produce chipboards, you can't have MDF together with unprocessed wood. You need to be able to take out the MDF. This is then an algorithm that can enable that. It enables then more accurate sorting into different quality fractions so that it can be recycled into new materials. This is very exciting. It's a first-of-a-kind of offering in the industry, and it looks very promising. Over to Food. The good momentum in Food is maintained in the quarter. We do see global trends like labor shortage and significant delays in our deliveries to the customers.
A highlight in the quarter within the food is the launch of our field research center in Hamilton. As part of our food strategy, there are two key strategic pillars. It's customer centricity and it's category focus, crop focus, you know, on the type of crops that we are sorting. And the land where we can then grow different types of crops, and because of the climate there, it's a wide variety of crops we can grow. We have product design facility, we have cool storage, we have a facility for full test simulation of packaging lines, et cetera. We can really simulate an environment that is similar to what our customers have to really drive customer-centric innovation. We also have at this facility engineers and data scientists, and it is the home of our food science program.
A quick look at currencies. Some headwind this quarter compared to the same quarter last year. Five-six percent on average negative effect on the different line items, which is reflected on the right columns in the following slides. In total, as Tove said, all-time high revenues up 16% from last year. All units and divisions are contributing, but in particular, TOMRA Recycling Mining stands out at 51% growth.
The gross contribution is slightly down, stemming from Collection and Food, which we'll come back to on the different units as well. Operating expenses are up 14%. Initiatives in all divisions for future growth, particularly on the ramp up side in Collection and circular economy in TRM. Bottom line 13% up, which is also all-time high with NOK 535 million. In Collection, healthy 9% growth on top line. Northern Europe is down, but still a decent quarter because we're comparing also with the best quarter ever in Northern Europe from 2020. The rest of Europe is the driver for growth this quarter. Slovakia had commencement first of January, 2022.
We had a rise in Slovakia during fourth quarter. It's partly offset by the Netherlands that, as you might remember, introduced deposits on the small plastic bottles back in the first of July 2021, and they started their rise all the way back to... Again, last year stands out as an unusually high fourth quarter. Going back 39% and 40% is what we have consecutively reported for fourth quarter in almost 10 years. That's kind of the normal level. That being said, we do have costs related to sourcing and freight.
As we have communicated previously also, we have the kind of additional costs during the year, related to components and freights over and above what's more normal, and it will have a 2 percentage point influence on the margins for the year and also for the quarter if it wasn't for those. Operating expenses, 17% increase. Latvia is in there with close to NOK 15 million as a ramp-up cost related to preparing for that market going live. What's our normal when it comes to preparation for future markets? It's up from NOK 100 million, which had been the run rate previously. On Recycling Mining, we are slightly above, we came in slightly above our indication from last quarter. As I said, 51% growth on top line.
All geographies are performing well. The margin is stable. We expect that we will have a conversion ratio of 60%, meaning that the revenues in first quarter 2022 will be approximately 60% of the current order backlog. As always, this is not guiding, but an indication to those of you that want to model us on a quarterly basis. In Food, we came in at NOK 938 on top line, 11% up, also slightly above our indication from. We mainly look at this more as a timing thing and not as a trend in that respect. When it comes to the order backlog, it's still 19% up compared to last year, which is a good start for 2022 first quarter 2022.
Balance sheet and cash flow, all-time high cash flow this year. In general, a strong cash position. We have, looking at about. We actually do not have more interest-bearing debt to pay down, if we didn't start to buy back our own bonds, which is not part of the plan. We see cash is increasing, and consequently, the board is proposing an extraordinary dividend on top of an ordinary dividend, reflecting the very strong cash position in TOMRA. We have. Outlook. On collection, as always, the timing of new markets is important, and we have currently high activity related to the preparation for new markets.
We are very optimistic looking at all the things that's supposed to happen late 2022, and in particular in 2023. On supply chain and logistic challenges in general, we have experienced more or less the same situation during fourth quarter as we have during third quarter, and the situation is not very changed from it, how it looked three months ago. We will continue to honor our obligations and take the cost when needed to make sure that we deliver upon our obligations. We also have the similar cost in the other divisions. Inflation is also the topic. Components, freights, energy, salary all are creating inflation. It has done so during fourth quarter and expected to continue into first quarter.
We, of course, need to compensate and balance it by raising prices. We have done that, and we'll continue to do that. I mean, we always are subject to or influenced by currency fluctuations. Today, it looks like first quarter would not be very influenced compared to first quarter last year, but there are still one and a half months left of that quarter. With that, I think we conclude the outlook. Just one slide. It's been four years since our last Capital Markets Day, and we are looking forward to.
TOMRA in May 2002. I suspect, Espen, that you never have missed a quarter presentation. If I count it correctly, this means that this is your 79th quarterly presentation for TOMRA. The company has gone through a tremendous, you know, development in this period, which has been almost 20 years. The revenue has increased from NOK 2.7 billion to today around NOK 10.9 billion. The number of employees has more than doubled. The company has gone from being mainly on a reverse vending machine with Europe and North America as the key markets, and to really be a global technology leader in circular economy. You, Espen, have been essential and fundamental in the key strategic evaluations and decisions that have been made, but also in the implementation of it.
also in addition to that, you have been a true role model in the organization, a person-
I'm leaving, assured that we have. We will take very good care of the company. We have a great management in place with Tove and also Eva, that will be my successor. She's been with TOMRA for many years, and truly living the TOMRA values and understanding our business also. TOMRA is definitely in safe hands. I think it's good to move on, so I will pursue a career as-
Good morning. Would you be able to discuss the main drivers of the margin compression in collection? How much was it due to investments, and how much due to inflationary pressures?
I think that is for you.
Yeah, Espen, if
Yeah, I saw that question come in, but I think we answered most of it also, with the components and freight that really adds up to the 2% here, which may be a slight overage also, actually.
Thank you. The next question is also from Aurelio. Is there dual sourcing for all the components, or are you exposed to a single supplier for certain components? How effectively can TOMRA pass on price increases to customers?
Yeah, I can start, and then you can elaborate a bit, Espen. When we enter into this situation with shortages on components, we did actually have single sources. On price increases, this is of course, I think also Espen, you know, covered that in his presentation. We are, of course, working hard to then pass on the increases that we see in our cost base to customers. Do you want to add something, Espen?
No, but I think that covers pretty well. I know there are some questions about price increases and in general. I think there are several things that we do. It's not mainly about salary, but that's, it's part of it. Energy is increasing. We are not very energy intensive, but it's also part of it. What is most important is from the components. We are selling technology and components. Semiconductors in particular are the one most important driver on the cost side, if we should point at one. All in all, we are kind of on average currently increasing prices to offset this.
Thank you. The next question is from Ole Bang-Andreasen from Tower House Partners. Can you elaborate on the drivers for the growth in Recycling Mining, and how should we think about momentum going forward?
Yes, I think I said a bit on that in the presentation. You know a key driver is the raw material prices, and we do see high raw material prices both in the plastic and the metal segment. But also, we do see a significant momentum in general within the circular economy space. You can just follow, you know, a lot of companies launching new targets on recycled content as part of their actions to reduce climate change. Overall, we see actually good demand momentum in all segments that we are operating in, and we expect that to continue going forward.
Thank you. The next question is from Peter Mohn from Alpha Capture. Could you possibly quantify the size of the wood sorting market?
Yes. The wood sorting market for us today is a fairly small segment, only representing NOK 1 million-NOK 2 million. However, of course, if you look at the potential market here, it is significant. That's why this is an interesting development that we hope will contribute to the growth going forward.
Thank you. The next questions are from Kristian Spetalen. In one, I think they are most for you, Espen.
Yeah. You take that.
Yeah, I think the order intake was good in recycling mining, so the question is related to food, and I think both Tove and I elaborated upon that one. That maybe that question came before we presented it, so I don't think it should be needed to give further perspective on that one. Turning back to the forecast for the EPS in 2022. It's also 40%-60% of the earnings that we pay out as dividend, but that's 40%-60% of the 2021 earnings. There is no intention to give any signals on the outlook through that dividend payment.
Thank you. The next question is from Daniel. What's behind the decrease in Food. You mentioned trade fairs. Has there been any of this since 2020? And how is the outlook on the fairs?
Yes, I think we answered kind of the first part, elaborating it. Of course, as we're coming out of COVID, the fairs are coming back. For example, this big Fruit Logistica fair, which is an important one, will happen in Q2 this year. We expect, as the pandemic is hopefully ending, unless there are significant other surprises.
I might suggest-
Thank you. The next question is also from Daniel from ABG. Could you give some color on the dynamics between cost and prices in your pricing models? Do you automatically raise prices at given intervals, for example, New Year's? Or how does that work?
They are very dependent upon the divisions and the segments. In Collection, we have some of our largest contracts. This is more framework contracts, and that's more annual or biannual revisions. In the other divisions, it's more price lists so that you can update regularly at year-end or during the year. We are more free to change prices as we want to. Of course, year-end will always be a time for revising the price lists, but they are also possible to do that during the year. We do have some situations where it's lagging a little bit, so before we can do it because of longer contracts.
Thank you. We have one question here from Stefan from [Key Online], which I believe we have answered during the presentation. Which countries will be introducing reverse vending machines in the next few years? That we elaborated on in the collection section. We-
I think we just adding on what we said there because at the slide, we show the markets that are new development and this is closer in time. Behind this, as many of you know, there is the Single-Use Plastics Directive stating that 77% increasing to 90% of all bottles in EU should be returned for recycling. To our knowledge, there are no other ways to get even close to those targets without introducing deposit. That's meaning that most or almost all countries in Europe that currently do not have deposit are in the process to look into how they should be compliant with the EU regulations, and 2025 is the first deadline in that respect.
There are many countries which is not on the list here that do also have processes in place, but it's not mentioned there because they do have not yet communicated the clear plan and the date related to it. The list is significantly longer than we show on that slide.
Thank you. The next question is from Daniel from ABG. How is the R1 introduction in Germany progressing?
Yeah. R1, it might not be that everybody listening knows what R1 is, but that is our multi-feed reverse vending machine that we launched last year and also gave them good growth in some of the key markets, especially in the Nordics during 2021. We are progressing with also sales in, of R1 in, Germany, and we have implemented or installed several of the machines in the market.
Thank you. The next question is from Erik Tørstad from [Arctic Securities]. Can you indicate the level of ramp-up operating expenses you expect in 2022, for example, related only to growth initiatives and not supply chain issues or COGS inflation, if possible by segment? Thank you.
Yeah. The ramp-up is usually an expression we use for collection since there it's extraordinary costs that we now take related to preparing for new markets, some mentioned and some not mentioned, establishing ourselves out, being there, preparing ourselves. The ramp-up is related to collection. We have been trading or have a run rate of NOK 100 million for the first half of 2021, and now it's increasing to closer to NOK 150 million. We have reached a new level, and that's hitting our OpEx. That's what we will have in next year.
Thank you. The next question is from Paolo Mortarotti from Tower House. The first textile recycling plant is now running with your technology. Can you comment on the outlook for textile sorting and whether textile recycling lends itself to dedicated RVMs?
Yeah. Textile is a very interesting market. If you look at textiles today, very little of the textiles are recycled. Some is reused, but most of it ends up in landfills or in incineration. Estimates show that, you know, almost 10% of global climate emissions is linked to textile production. This is a significant issue, and if you look at recycling, almost nothing is recycled. This is one of the big issues that need to be solved. You need to have solutions both for collection and sorting of the textiles into different fractions. We have, as part of our sorting technology, the possibility to sort different textile fabrics into the right quality so that it can be recycled. It is an interesting segment that we are looking into.
Increased pressure on the textile industry and also the EU is now looking at coming with an updated strategy for sustainable textile manufacturing and value chains, which is expected to come also during this spring. It's an interesting segment that we will continue to look into.
Thank you, Tove. I see that we don't have any more questions, so we are ready to conclude the Q&A and the session for today. Thank you all for following us and for listening in. Bye-bye.