Norwegian bottle and can recycling company Tomra ASA will write down around $40 million of investments in California during the fourth quarter of last year and is considering writing down around $5 million on its German investments.
"Lack of progress during the 4th quarter 2001 has led to the conclusion that the book value of certain assets can no longer be justified," Tomra said in a written statement.
The company warned in July that a possible restructuring in California might hurt revenues, despite improved profitability.
Tomra also said it might have to carry out the write downs in Germany if problems with the start up of a bottle deposit system "are not concluded on or before Feb. 14, 2002."
Since start-up in California, TOMRA has made several organizational changes to improve the financial performance. During second half-year 2001 the company changed its organizational structure and introduced management tools to improve overall monitoring capabilities. This has, however, not been sufficient to avoid a substantial worsening during fourth quarter 2001.
Immediate measures will be taken to ensure break-even in California during second quarter 2002.
RePlanet has been well received both by consumers and authorities and will still be the basis for TOMRA's continued activities in California. The concept will need further refining and improved efficiencies in order to operate as a fully automated and functional solution. Other measures will include further organizational adjustments, closing of loss-making recycling centers and cooperation with the DoC to ensure long-term improvements of the deposit model.
Chief Executive Erik Thorsen said that California would have to change its recycling laws to enable Tomra to make money.
``We acknowledge now that under current legislation it is not possible to make a profit based on Tomra's business model,'' Thorsen told Reuters. ``We will not see acceptable profitable operations unless the legislation changes.''