Kodak is preparing to sell off parts of the business, less than a year after deciding to hold on to the Prosper inkjet business that had been on the blocks for more than a year.
The announcement that the company is looking at strategic divestitures and monetisation opportunities came with the release of Q3 figures showing the company fighting headwinds on four fronts across the business. The film business, the advanced material and 3D manufacturing, IP licensing and especially commercial print.
As a consequence it reported a net loss of $46 million for the third quarter, a $58 million swing from the equivalent point in 2016. This was partly the result of a write off of goodwill in the software division. Operating profit for the quarter was $15 million, compared to $22 million last year.
Revenue for the quarter was $379 million ($411 million), but holds on to forecasts that at year end its revenues will be $1.5-1.6 billion.
Earnings in commercial print fell 18%, the result says Kodak of increasing plate prices and delays in installing new plate processors. Revenues in the print services division fell 7% to $232 million compared to 2016. Within that plate volumes were 3% down.
However, the company can point to a 24% quarter to quarter increase in the volume of Sonora process free plates shipped. Sonora has been identified as a growth opportunity for the business and now represents 19% of all Kodak plate sales.
Likewise another engine of growth is the Flexcel flexo plate business. Sales were 7% up and there were 12 platesetters installed in the quarter. Revenues in inkjet fell to $33 million ($47 million), but annuity revenues for Prosper rose 9%.
However, these bright spots could not outweigh the performance in other areas. With a $400 million debt maturing in 2019, CEO Jeff Clarke says Kodak would like to remove some of that, hence the divestment strategy, proceeds from which will be used to reduce debts.
“An overall print market slowdown and rising aluminum costs have impacted our commercial print business,” says Clarke. “We are taking immediate actions to accelerate cost reduction and reduce investments to sharpen our focus as we continue to actively pursue changes to the Kodak product and divisional portfolio.”
It is also aiming to slice $42 million from overheads through better use of technology and the elimination of 425 jobs. Excess property across the world is up for sale while thousands of acres in the Kodak Business Park in Rochester are earmarked for disposal.
It has not identified where the job cuts, 7% of the current headcount, will fall, other than that 100 will be lost from the Rochester headquarters. John O’Grady who has led the printing systems division is moved to lead the consumer and commercial film operations.
Other than disclosing that negotiations are at an advanced stage with both strategic and financial buyers, there is no discussion about which assets or operations are being sold or to whom.
Demand for the Sonora plate is rising and the higher value product is now responsible for 19% of all its plate volumes.Inkjet volumes increased as did the flexo arm, but this was not enough to prevent Kodak sliding into loss.