Good morning, ladies and gentlemen. Welcome to the 3rd quarter results announcement of TOMRA Systems SAASA. With me my name is Stefan Randstrand. I'm the Group CEO. Together with me here is Espin Gornelsson, our CFO and Elisabeth Saines, our Investor Relations Head.
Short, the quarter had a few highlights. I think we it's worth mentioning a good momentum in the sorting business with good order intake as a result of that. Somewhat calmer collection solutions. We had high activity or have very high activities now in Australia as we are ramping up for the start of the New South Wales container deposit go live 1st December. And basically, Compaq, our acquisition is on track.
Revenues in the quarter ended at SEK1.855 billion, slightly down in collection and up in sorting solutions. Gross margins, broadly unchanged. They were slightly up in Collection Solutions, but we had a slight dilution in sorting as a result of Kompak, which was expected. We see an increase in operating expenses. Number 1, of course, is that we have now consolidated in compact in our books.
They were not with us a year ago. And we have some additional costs in ramping up for Australia. Earnings EBITA ended at NOK303 1,000,000. Cash flow at €375,000,000 And we had an order intake in salt and sloshes that went up 22%, ending at DKK724 million and resulting in that we now have an all time high order backlog of DKK924 1,000,000. Shortly, if I look at the broader picture where Tomra is operating, we do have a very focused portfolio around collection solutions and around sorting solutions.
We are based on sensor technologies, and we are active, you could say, in 2 main segments. 1 is what we traditionally call recycling with the solutions we have both in collection and sorting. A more modern word, which you will probably hear more from us is circular economy. It's really about how can we bring bottles and cans into new life. And with the discussions, with the developments I see in the market, I see that we are very well positioned in the fact that we do have both collections and sorting.
How is that, you might ask. Well, a lot of consumer goods companies now start looking to really taking care of their sustainability agenda, trying to build a model where they can produce new products out of recycled material. They need that both to secure material at a lower cost, but also in order to show that they take responsibility. The biggest challenge in this model or one of the biggest challenges are actually to get hold of the material. So by having collection solutions that can collect in a high quality way with continuous volumes is an enabler.
The processes to do recycling of new products after recycled material requires a lot of know how. And I dare to say, to a large extent, we are a good partner for that. We have a lot of know how to help these consumer goods companies to do that. It's still at an early stage, but I see that's a big driver going forward. And it's good that we can work on these concepts early to build smart circular economy solutions with the use of the platform of TOMRA capabilities.
The second leg we are strong in and also here a market leader is in food sorting. The world is moving with very high speed here as we see large cities growing up, I call them smart cities, with a lot of urban citizens, that trend will continue. Predominantly, I see the changes very rapidly happening in emerging markets in countries like China, Southeast Asia are very quick here. Where you see strong urbanization growth, people get wealth, they want to consume in a convenient way. So smart cities, the rise of e commerce requires for good logistical and quality control in the food supply chain.
Remember, food needs to be sourced from globally. In order to bring a blueberry on your plate every day, that blueberry is not brought up in one region or grown in one region, it's grown from a local base a global base. And to have the right technologies, enabling the quality control, the sorting of that is critical. So I see these mega trends, organizations, smart cities, bigger wealth, we need mid class consumers growing critical and also the trends that people want to have better, healthier food and want to have the ability to buy it. In combination with e commerce, our strong drivers going forward.
We are still at an early stage here, but I see strong directions going in this way. And we want to be playing a role in that moment. So that is a short introduction. I will let Espen go through some of the numbers now and come back later.
Yes, quick look at currency. The U. S. Dollar has weakened. And as we are exposed to U.
S. Dollars, this also have an impact on our performance. So some headwinds from currencies. We have also on the bottom here showing the exposure on the different currencies, some small adjustments compared to previous figures with those of you that follow this course and model this just for your information. Looking at the P and L, yes, as Stefan said, collection slightly weaker compared to last quarter, same quarter last year because of lower activity in Sweden and Germany, strong growth in sorting, 8% up And then, of course, Compaq on top.
Margin, stable overall. Operating expenses, up mainly because of Compaq. Without Kompac, adjusted for currencies, we are 4% up, which is again mainly explained by the ramp up cost in New South Wales, which we also will come back on later slides. Balance sheet, rather uneventful if you adjust for currencies and adjust for the Compaq acquisition, you will see that it's more or less similar to what we saw 12 months ago. We have some seasonality, particularly in the U.
S. Activity within collection. And consequently, we have to compare all these 12 months back to find the right seasonality. And during that, you can also see that the working capital is almost identical to what it was 1 year ago, a little north of SEK1 1,000,000,000. And we therefore also continue to have a strong cash flow for the month and also the quarter and year to date.
Moving into Q4, we will have some negative impact from New South Wales ramp up, which we will again come back to, just mentioning here when we're talking about cash
Collection Solutions market where we founded TOMRA very dear to us, a focused area, we have a leadership position in this segment. Our estimated market share is 75%, and there has been no changes in that. We are maintaining our strong market situation here. We do see in this quarter, number 1, that Sweden, where we had a replacement a year ago, Due to technical reasons, we had to replace quite a number a lot of machines in the Swedish installed base. That was ended ended last year, beginning of this year.
And consequently, that impacts the results that we don't have this event anymore. And As you know, we are in the midst of a replacement event in Germany as well. We will come back to some more details around that. Esben will talk shortly about that, how that looks. But also here, we had an estimate for the event over 4 years.
It seems that it is happening. But we had quite a strong activity in the beginning of the period. Hence, we expect this year and next year to be somewhat slower. So nothing unexpected here, fully in line with what we had expected. The big event right now is the ramp up in New South Wales.
But just to be prudent, revenues ended at just north of 1,000,000,000. Gross margin slightly up due to portfolio reasons. Operating expenses of €200,000,000 Here, up about 5%, and that's almost entirely due to New South Wales. So good cost control in the base business. But of course, when we have to invest in new markets, we have to also accept that the operating expenses go up as we build an organization.
And that means also that we got a slight decrease in the earnings EBITDA ending at €236,000,000 I will go in and talk a little bit more about the New South Wales. New South Wales decided to introduce a deposit legislation for about 7,500,000 inhabitants. That system is planned to go live December 1. It's a complex project. It's far away.
Basically under as far as you can come from Norway. It is a new system for us, completely new market. We did not have any installation in that geography before. So consequently, we have now put a lot of efforts. It's one of the biggest projects we have ever executed in the history of TOMRA.
As I look at it right now, I we assess that we're on track. So we are targeting to be able to switch on the system as planned. I should not guarantee to say that there will not be any hiccups, but we are in a good stage here. But it means that we have to deliver a lot of RBM's in a short period of time. Remember, we got the approval to do this kind of end of July.
So it's not too many months. And it's quite long shipment time down to the Southern Hemisphere. And we also have to produce a lot of equipment locally. So a lot of news here for us. We also have a joint venture here with a leading waste management company called Cleanway.
And we have signed a partnership with 1 of the leading retail chains in Australia, Woolworths. It's interesting. Strategically, it's high importance. It's a new market that's good because we know that traditionally collection solutions need this kind of new events to continue to grow. It is good because we are seeing that when we go into new markets, we see that the trends, the conditions are slightly changing.
If you think of TOMRA in 10 years back, we were selling traditional RVMs to retail. It was pretty much a stand alone solution built into the store and was a traditional contained deposit. And we had to focus on shipping machines, servicing machines and also taking care of the clearance we need to work with someone else, a partnership, a collaboration for logistics and for handling of the plastic processing. That is now, in this case, clean way. It's great for us to learn to work that way.
The machines are actually more like we call them kiosks. They are standing not in store. They're standing somewhere close to retail or in some locations. So again, partly a hybrid. They are also designed in a partly different way.
They can take different type of fractions and so on. And in addition to that, we have a partnership with a retail chain. So there are some few new elements here, which I think is good for us to test out. As we move on to new markets, as the market demands are or requirements are changing, it's very important for us to learn new models as we go. So I think if you look at collection solutions today compared to where we were, say, 10 years ago, you will see that we have moved on quite a bit.
We will build up about 500 collection points and most about half of them will be fully automated between 2 and 4 RVMs per installation. And as I said, it's a logistical big project also in terms of installing, getting site approval, etcetera. Also, the IT landscape requires us to build an IT interface towards the Cleanaway partner and IT interface towards the new system operator and IT interface towards the retail. So quite a lot of exciting things here, and I'm very pleased for it. The whole organization is very geared and we have people from basically all over the world being in Australia contributing.
So that's really also exciting for the organization in that regard. I'll show you a short video here if I'm able to do it. Let me now see how I can get here. And I hope this will work.
Picking up your discarded drink bottles is about to get lucrative. We are going to make it easy for everyone across the state to have a place they can go and get their refund. It's all thanks to these reverse vending machines, which crews work through the night to install the first at Spring Farm. It's a massive logistical exercise, which we're starting today. The machines will take your used drink containers between 150 mils and 3 liters.
In return, you'll be paid £0.10 for each bottle, the money to go either to your chosen charity or into your bank account.
I think it's a fantastic idea.
I think it's a really, really good idea as long as people use it.
Here in Camden, this is just one of 1 180 reverse vending machines to be rolled out across the state. It's hoped that they will be a game changer for recycling in Australia. The scheme aims to reduce 40% of the state's litter by the year 2020.
So to round up, big project, very exciting, top priority for us. We are very committed, and we want Sogne to make a success here. And it's not too far away in the future. So soon we will see the results. And the New South Wales population can start reverse vending.
With that, I think I can hand over to Espen to go through more the financials.
Thank you, Stefan. Just briefly on New South Wales since I know some of you are eager to put some figures into your spreadsheets. The setup in New South Wales is that we have established a joint venture with Cleanaway, and we have been awarded a contract for rendering the network of return points in New South Wales. And it's a rather slim joint venture where they will do some manual sites, meaning not the automated sites. And we have the clearing with the skin coordinators, the money deposit handling fees will go through them.
But beside that, it's our responsibility has been outsourced in a bit of clean away, which will pick up the bottles, process and sell the material. And Tomra, which will build the collection infrastructure, will kiosk the RBMs and operate this infrastructure. And consequently, TOMRA will do an investment, which will hit our books. And how big it's let's just say how this will be. But to use very own figures, you can assume that the fixed assets plus the working capital could, I suggest today, be around AUD 50,000,000 Particularly the working capital part is uncertain because it's still how the cash flow will work within the system here, but just to give an idea of what this might be.
At the same time, the revenue that's hitting Tomra's P and L above the EBIT line will be related to the volume driven through our infrastructure. And today, we don't know what volume that is hit our infrastructure. It's about the drinking consumption. It's about the return rate. And it's also about the fee structure we have established.
But over time, with a lot of assumptions and with a lot of uncertainty, we believe we can earn maybe around $50,000,000 as a revenue per year in this infrastructure. This is that part that will hit our revenues, our P and L above the EBIT line. Joint venture will not be very visible and not big figures in this context and will be reported as an affiliated company, meaning below the finance line. So that's some figures to play with. And you have to do your own assumptions when it comes to this.
We don't know exactly how this will turn out, particularly not on the revenue side because it's very dependent upon return rates. But also on the cost side, we have not run this yet then, telling me, sure, exactly how this will run out. But of course, rest assured, we do an investment. And based upon an assumption that we will do a decent return on the investment that we do in Australia. On the figures, yes, very briefly repeating what Stefan said.
Nordic down in Germany. North America, flat or plus 1% adjusted for currencies. So a rather stable month. OpEx, somewhat up, but that's again €11,000,000 from New South Wales. Germany, as Stefan also mentioned, we have had the periods where we from 2015, maybe kind of had the 2nd replacement or replacement race in Germany.
And we have indicated a ban between 2,700 and 2,700 machines per year. It came out high in the ban, the 2 first years. And now it looks like we will be lowering the ban into next years. It's not likely that we will pass 3,000 machines in 2017, for instance.
Yes. As mentioned before, sorting solutions experienced good momentum right now. Revenues were up 8%, ending at NOK 831,000,000. Gross margin slightly down predominantly as a dilution effect of that compact is coming in. They do have a little bit lower gross margin.
At this stage, we are, of course, working to improve that, but that was expected. And earnings EBITDA of €83,000,000 and the nice side here is a solid 22% growth in order intake ending at €724,000,000 and an all time high order backlog of €924,000,000 Looking at the different sectors, starting with food. I mentioned briefly before, they are strong drivers. We need to produce more food. The market is shifting towards healthy food, strong drive in smart cities, but demand, of course, throughout the world.
I had the privilege to visit some 100 customers this summer, especially around the compact side. Since that was new, I wanted to dive into that and understand. And I see very positive feedback from that visit. We can see it's a continuous growth in investing in new crops. So people are planting.
You can basically see what's going to happen in 3, 4, 5 years. So if they say orange producer or an avocado producer, you see the what they are processing today, and you can see the geographical areas that is under exploration. It's a nice thing. The customers we have, they are very committed. They are mostly family businesses.
They are running their operations. They are living there. And it's their baby. You can see a big passion. And they're operating in quite good markets.
Fresh produce is sought after, is good pricing and hence the willingness to invest is high. I thought a lot that Compaq is well positioned in the market. The technology is much appreciated. It's the best sorting rating system. What I get in the market, what the people tell me, and it's running well.
It's even to the point that we are now with our spectrum, which is the, so to say, obstacle or the head of the brain of the whole sorting unit. It's even, in some cases, implanted on competitor equipment on top of the airlines. So our grading system is state of the art. That's good. I think we can improve somewhat on the service.
So that's something we're looking at. That's feedback that we are everywhere, but service could be improved and certainly that we take gladly as an improvement area. So overall, in food, both for the traditional Tomah Sorting Solutions and for Compact, we see good momentum. And I don't see that there is a major change here. Recycling has been tougher the last years, especially 'sixteen 'fifteen, 'sixteen, we were facing some headwind very much due to lower commodity prices.
We see that, that has stabilized. I was recently at the customer event we had with some 130 customers. And also here, I feel we are really leaders. We are thought leader. We are technology leader.
We are the ones driving the industry. And we do have a market leadership position with an estimated 55% to 60% market share. That's visible. We have teams working on existing solutions. We have teams working on new solutions.
We are in all critical geographies that are growing up. It's running well. On the recycling arena, we have to remember that China is a very important market. And China has come out with a new event, they call National Sword, which means that they will not allow import of waste, which happened in the past. They are banning that.
Meaning that now that waste that was previously exported to China needs to be handed somewhere else. And we see a lot of initiatives now to actually invest in the domestic markets. So let's assume that waste is generated in America. Instead of shipping that waste to China, they will need to treat that in America and make valuables out of that. So again, that's a good driver actually in the industry.
So such an initiative like the Chinese have launched here, the so called National Sword, is actually not negative for our industry. And hopefully, people see the opportunity to generate good recyclable raw materials in the local market and by that also creating green jobs. So recycling, I see that we have seen a recovery in the market, and we see that we are in a positive momentum. In the mining sector, I do not need to talk too much. It's still very small, but all I can say that it's going well.
We have also good momentum here, but again from very small numbers. Spend a few words rather on Compaq. We did the acquisition. It was a turnaround company. It is a turnaround company, And it came on our books in February this year.
So it's new for us. We went in. We have spent a lot of time, very focused. Espen and myself, we have basically been there rolling every month. So I've been there every 2nd month and has been there every 2nd.
I'm on a crossing so that every month has been a visit. We have really worked much with the local leadership team. I would dare to say we have a good leadership team. It's been strengthened and we are pretty confident we are on a good way here. And the broad message is we are on track.
So that's number 1. We have focused on a few important areas. Number 1 was to develop regional operating centers. And in simple ways, you could say that's sales and service. But for Compaq, it's more because if you can see on the picture up on the top right corner here, it's quite big installations.
We need it can take up to 2 months do installations. So we need a crew to do that. We need to source 3rd party equipment. And that needs to be done locally. So we don't do that centrally because there's no global standard for that.
So a regional operating center, in our view, do not only need to do sales, marketing and service in a geography. They also need to do product management, sourcing of 3rd party equipment, installation. And
by that,
it becomes quite a big operation as part of hence, we call it the regional operating centers and not only sales and service. And we do have now built up 1 in North America. We are building up 1 in Australia and New Zealand. We're building up 1 in Latin America. And we will continue.
The businesses it's a global opportunity, the business, but we are not really running globally yet. We are really focusing on the core markets at this stage to get our model running, and then we are ready to expand into new markets. So I think there's a lot of opportunities in the long run here going forward to expand also in new geographies. We experienced good orders growth. That was initiative number 2.
We are depending on the volume and especially then launching the new technology spectrum, which is going well. We also, when we took over this operation, experienced the company with 4 production sites. We have reduced that. We now have 2, and they are focused. You see that makes the visual inspection system.
And in China, we're producing the lanes, which you can see here, they're mechanical. So a lot of labor, a lot of components. So hence, we can source our components locally and build them together for shipment in China. They are then shipped in modules kind of in containers so that it can be built up very quickly at site. We're on track on that.
We just inaugurated our new factory August 28 in China in Kunshan, just in our west of Shanghai. And it looks good. So that's going on. Further to that, Compaq was a family driven company out in New Zealand. So a lot of resources were placed here.
We're not moving resources into the markets, especially installation service. It is not viable to send people in and out. It costs too much money. It's too slow. Instead of that, we are in the regional operating centers building local resources to handle all of installation and service, and that's on track.
And the last item was to really get a good control of the business planning or the business control, so the financial administration systems, the production planning. And I think that's also running very well. So in essence, be close to the market with local activities, have a strong global control, focus on the core, deliver what we can do and try to avoid full turnkey solutions that's also on track and continue to grow the business, develop people and our market relationship. I am pleased with this. And as I said before, we are on track here.
So with that, I think it's time to hand over to Espen.
This figures, 8% growth without Compact and currencies. Compact is in there with €158,000,000 of revenues. Margins slightly down mainly because of headwind on the dollar, also some compact effect. Bottom line, dollars 83,000,000 Compaq was very close to breakeven this quarter. Looking at the order intake, all time high intake, if you allow to include Compaq, second to all time high on all sorting.
Revenues, somewhat down compared to at the end of Q3. Conversion ratio estimated for next quarter, meaning 4th quarter is 75% to 80% of the end backlog as of 3rd quarter. Yes, in collection, the same trends that we've seen through the year is expected to continue. There will be slower Nordic compared to same quarter last year. Germany will be slower, as also mentioned.
We will have significant ramp up cost from New South Wales. How much remains to be seen? If we again allow us to operate in very round figures, let's guess we will be around A10 $1,000,000 that will fit our P and L in Q4 related to the ramp up. And then we will start to recognize revenue from 1st December, but it will be low as it's a start up. So it is limited how much revenue and profit from that, that could be recorded in Q4.
I mentioned SEK50 1,000,000 as a rough way to estimate what the revenue might be in the future. But also remember, it will take some time to get there because of the ramp up. And the figure will could be something different also because return rate and what have you of uncertainties around the exact figure here. In sorting, there is good momentum in food, good momentum in recycling. We have indicated the conversion ratio, which indicate that Q4 will be another quarter for that segment as well.
Remember, currencies, with today's dollar rate, we have close to 7% in the dollar, which will have a negative impact on the figures when you do your comparison against last year. With that, we open up for questions.
Can you give an update on the coming bottled deposit system in Scotland and Spain?
The question was not so if you can speak louder, but Scotland and Spain. Right. Scotland has indicated that they will introduce a deposit legislation. So that is something we are definitely working on. We have been there for some time and done some pilots.
So we are familiar with the requirements. There is no, to my knowledge, firm time line. So that is something we are geared up to. I think we Espen 2019 has been
an estimate. You mentioned, yes.
But again, let's not jump here until we have firm commitments. We believe it will come, and we are geared up to do that. When it comes to Spain, we have new news. We have been working, as you know, in Catalonia, Valencia, Balearic Islands. And to this date, we have no use of any movements there.
2nd question from the web.
There has been no news in China. We are working in the market to make build up circular economy system. And if we think about collection solutions, we will, in essence, require a contained deposit legislation. There's nothing like that being announced at this stage. And if it happens, it might not happen on the country level rather than on provinces or cities.
We are close to it. We have activities in China. We have some 170 people there now. So of course, we are following what's happening on the political agenda. But for sure, we know that circular economy is on top of the political agenda of the leading politicians.
We know that smart cities, the waste generation will grow dramatically in China, And they have a big need to build up an infrastructure to handle that. So we remain positive that there might happen something in the future, but we have no facts at this stage.
Thank you. Dwayne Kringeb from ABG. Obviously, I know that there is some uncertainty, but can you elaborate a bit on the sorting sales and why you didn't meet your own guidance for Q3? I'm always clear that there's no guidance here. It's just an indication based upon the current delivery schedule, how we believe they end up.
It makes life a little easier for you also. So but when you come to year end or quarter end, some orders might slip into next quarter and so on. So it's, I think, we have 4% behind or something. The dollar is also down with 4%. So it's very small deviations against what we indicated.
And sometimes we are above, sometimes we are below. We don't guide on long term deliveries and we have no financial targets. So at least we're at this 10%. But to give you something to use in your estimate for the quarterly previews, we will give you this indication. And sometimes you are both, sometimes we are below, and there's nothing dramatic about that.
To me, it's only about execution. The important figure is to order intake. And as you see, we are slightly below on the revenues. And then also we end up with an all time high order backlog. So there's nothing dramatic around it.
Maybe I can just add to that that we have had no hiccups or disturbances in operations. It's more timing of projects. The customer might be delayed. 2, 3 customers being delayed with their construction of new plant, meaning that they want to sort this later. That is the whole difference we're experiencing, nothing else.
With regards to other underfinance, on Compaq, you talked about a lot of initiatives that you're implementing in order to obviously get the profitability up, etcetera, etcetera. Is it in order to get that business up to the margins that you're hoping for, do you have to do also something with the price point, etcetera? Or is more sort of internal improvements, logistics in order to get to where you want to get? Thank you. I think the pricing is not a huge opportunity.
When the spectrum was launched, that technology is brand new actually. It was positioned with a premium price. So we are a price leader today pretty much by far actually. So and that's good because the technology is leading. Visited one customer, just to give you an example of that, who installed a spectrum in the 1st year of use.
And also bad system, he told me, they had 30% more Class 1 and it could generate 12% more revenues. That's the P and L for our customers. So there was a huge he said it was astronomic. For him, it was a fantastic success. And I see similar stories, but that was the most quantified feedback I've ever got during the meetings.
But these projects, if we just go through quickly, are quite complex, as I say, right? Now in the past, there was maybe not such a very defined well defined strategy of Compaq. They were struggling a little bit to shall we do turnkey? Shall we focus on what we consider the core? And we have driven this focus on the core.
Why do you start taking and just to give you a wrong number here, a project like this, if it's turnkey, then it's 100% right revenues. When it's only our graders and sorters, we, in such a project, will deliver about 40% to 45%. So it's quite a big part that is not core, if you understand me. When you take these products through your books, you will not make it can be washers, bin tippers, conveyor belts. There would be very low margins on them, right?
So by being able not to focus or not take them on our books, enabling the customer to buy them directly. So we can point to the customer and say, buy this equipment, that's what we could would have done. We don't need to mark it up, which is not in our favor, which is not in your favor. You get it cheaper, you get the same thing. Or working through integrators who do this.
This is the dual strategy we have to work on here. We can avoid these going through others. And that has a big margin impact, you can imagine, because they're basically dilutive on P and L. So we will see a little bit less revenues, but it's a good quality revenue. That's exactly what we want.
Secondly, operations were not optimized. They were fairly low when it comes to quality and on times delivery. We have focused a lot on that as part of this focused operations in New Zealand and China. And now we are almost at 100%. So keeping it there, of course, will be key.
But remember, when you produce in a factory and then you send that to site, you have a team of, say, 20 people doing installations, that installation will take 2 months. If then the shipments from the factory come late, these people will be idle. If parts are missing, that might need to go to the local iron store or to some local manufacturer to do some things. That explodes the cost. And as a result, you get a margin dilution.
So it's very easy to fix the operations, get it delivered quality and time, deliver on the core technology, trying to avoid third party equipment. And the last but not least, to have local people. We don't have to fly them out a lot of time, a lot of cost for the in the airport in the airplane, which the customer is not paying for. I mean, they are paying for installation. If we have a local installation crew or remote installation crew, it doesn't really matter for the customer.
But for us, it means the big in the world. So fixing these simple things are actually what we are focusing on here. Maybe that didn't come across before so well. So I'm convinced that we see we'll see and we're already reducing an increase in the margin. And it's as simple as these things here.
So it's nothing rocket science here. It's pure normal management. But having said that, it's not that the previous management were not good enough. It was just they didn't have this capability because it's a family owned company, quite small. They could not build this global base.
But being part of TOMRA, we can leverage that because we do have local sales and service. We can capitalize on what we have as infrastructure. So hence, also we see synergies in this case. I hope that answers your question.
Mickey Nelt, Carnegie.
It's very nice to now see costs, but also revenues coming in from New South Wales and Australia. I was wondering whether you could give an update on Queensland and Western Australia and what's going on there because we know that the timeline there has been much more
set
than it has in Scotland and Spain.
Would you like to take this one?
Yes. Queensland is the first one out. They, according to what they communicated, has a start date 1st July next year. So it's a few months before there. So it still is not completely clear what kind of models they want to run.
So we will be there, try to participate if there is a room for us in Queensland. So far, it seems that we choose a different avenue than New South Wales has done. But that's we need to I mean, that concrete system that they will set up is a little too early to say because they have not finished the structure of the system. So let's see. But in these opportunities, we will be there.
And Western Australia is partly the same also. They're slightly further down the road, but they also seems to have commitment to do something on the recycling here. We have, of course, hoped that we would see the same system all over Australia. But at least initially, it seems that there are and tendency to develop in different direction here also. Canberra, which is kind of an island inside New South Wales, has also established a deposit system, but that will be different from what in New South Wales, more MERS not return to retail and so on.
So sorry for being little unclear on it, but it's we are partly an only observer here. And it's the state and the stakeholders locally that establish the systems. We'll be there and try to create business opportunities out of what they decide to do there.
I can add to that, that I did visit the authorities in Queensland, not in Western Australia, but in Queensland, I did. And they are, of course, very much observing how it's going, what's happening in New South Wales. We don't know exactly, as Espen said, what kind of system they would
choose. But for sure, they are observing what's happening in New South Wales, how well that system lands. So I think the top priority for us is to make a good work in New South Wales. And maybe that could also be
to make a good work in New South Wales. And maybe that could also be a platform to communicate around. And for us, it's then important to be a speaking partner if they wish and when the launch process is when they set up for working groups so we can be there and share our experiences with authorities. But it's not in our control. I just wanted to mention that with New South Wales being a top priority.
And I think also in this context, important.
And then one last question on the sorting solutions. I know you don't typically split between food recycling and mining, but is it possible to give a slight hint of how much more recycling makeup of this year versus last year? Are we talking low single digits? Or are we talking like a significant increase in recycling with the uptick from commodity prices? Because obviously some of us were a bit surprised by both the activity level and the margin in sorting solutions this quarter.
So that would just give somewhat more flavor on the development.
Yes. It's not significant changes. We have usually said that the split between food recycling and mining is 60%, 30% 10% of revenues. This was before Compact and Compact comes on top. But looking at this year compared to last year, it's not a huge change in any respect.
Food has been growing, recycling has been growing and mining is growing as well also. Recycling probably slightly more, but it's not a big swing. So the percentages we have used historically is still pretty valid this
year.
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