Kodak has secured its immediate future with new loans and investment that amount to €210 million immediately and stave of the risk of it running out of cash and becoming another victim of the Covid pandemic.
At the worst point in the second quarter, Sonora plate sales were down 33% and Prosper revenues down 25%. Both have recovered in Q3 and since, so that the company ended the year with Sonora lower by 6% and Prosper revenues by 7%. By the end of 2020, Kodak has suffered declines across all sectors of its business with revenue from the traditional offset business down to $592 million ($727 million) and in digital printing to $241 million from $293 million. In all the company reported revenues just above the $1 billion at $1,018 million, a drop from $1,242 million.
While the declines were across the board, its older legacy products suffered most. Thus in digital printing there was a $41million drop in revenue associated with consumables, service and equipment sales from Nexpress compared to an $8 million drop from Prosper consumables and equipment. Versamark consumables meant a drop of $10 million. Kodak has ceased to manufacture Versamark printing systems. It amounted to a slightly increased loss for he year from the digital division of $10 million ($9 million).
The traditional printing side took a bigger hit, losing $27 million in operating product, but still generating $21 million for the company. The plate side was hardest hit in terms of lost revenue with $97 million attributed to a decline in volumes and $16 million to price erosion. Prepress software dropped $6 million and prepress equipment by $10 million.
These are losses attributed to the global pandemic, which Kodak hopes will recover. It does not account for any accelerating shift from analogue litho printing to digital technologies, underway in both commercial and packaging print. Kodak’s development of Ultrastream as a new generation of its continuous inkjet technology with a higher resolution and aimed at OEM customers like Uteco, is its ace card for this transformation. Ultrastream is also key to the Ultra 520, a litho transformation inkjet press which will go to field trials this year.
R&D spend dropped from $42 million to $34 million, the result of cost savings that are being applied across the board to help Kodak navigate the crisis. “We mitigated the impact of Covid with cost-saving initiatives, launched several innovative print-business products and generated cash in the third and fourth quarters.
“More recently, we announced a series of financial transactions which significantly strengthened our balance sheet and set the stage for growth through investments in our core businesses in print and advanced materials and chemicals, and new initiatives,” says executive chairman and CEO Jim Continenza.
“We’re going to grow our way out of this, not cut our way out of it.”
The influx of cash to the business will”strengthen the company’s ability to invest in strategic growth opportunities in its core business” it says. There is little other choice. It has sold off the flexo plates division, partly because in the long term flexible packaging will be a market for digital printing. Continenza has always been clear also that Kodak is not going to blink as the offset market changes. The company is convinced that as environmental pressures grow around the world, the market will shift to process free plates and with Sonora it has the most successful on the market.
