Kodak is on the point of announcing the sale of its Flexographic packaging division. The company is in exclusive negotiations with a potential purchaser, says CEO Jeff Clarke, with a deal expected to be announced before the end of the year and completed within the first six months of 2019. “We are in advanced negotiations on an exclusive basis,” he says.
The period of exclusivity with the possible purchaser ends today (12 November) though there is no guarantee that this will result in a binding offer and sale. Any proceeds will be used to repay Kodak debt, says the company.
As US markets opened, the buyer for the division was announced at Montague Private Equity. It will pay out $290 million, comprising $340 million than an earnest of $35 million and a final payment of $15 million in 2020 in respect of services and products provided by Kodak. Kodak will use the funds to pay down debt.
The Flexcel NX flexo plate continues to be one of the three growth drivers in the business alongside the Sonora plate family and Prosper inkjet products. Volumes of the flexo plate increased 17% and revenues generated grew 16%. Meanwhile volumes of Sonora plates increased 17% in Q3 compared to the same period in 2017. The latest iteration, the Sonora X, continues to perform in testing, with more than 1,000 accounts testing the process-free plate. More than 600 have switched to the plate, including a multi-site US printer handling 1 million m2 a year.
Revenues from Prosper inks increased 8% with further revenue coming from printer placement in the period. Combined the growth product areas accounted for 32% of the $366 million revenue for the quarter. This was an decrease of $13 million compared to Q3 last year. Operating profit increased $7 million to £20 million, but would have been higher without a $6 million increase in the cost of aluminium for plate production.
Revenue across the print systems division, the largest of its sectors fell 5% to $217 million.
Sales associated with now-discontinued Versamark presses continue to fall as planned. Prosper is the growth driver with Ultrastream positioned as a system for partners to integrate with, the product to generate future growth. Kodak expects to ship the higher quality inkjet technology in the new year and to reap the rewards from initial users in 2020.
It is all anticipating a strong fourth quarter in line with the industry’s seasonality. The company will be generating cash in Q4, says CFO David Bullwinkle, helped by the completion of actions to reduce operating costs. It expects to close the year with revenues around $1.5 billion and Ebitda of $55-60 million.
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