09 August 2019 Analogue Printing Technologies

Kodak sells China plate plant to expand market for Sonora

Kodak hopes to boost demand for its process-free plate portfolio in deal with largest plate producer in China.

Kodak has sold its Chinese plate manufacturing site to Lucky HuaGuang Graphics, China’s largest plate and film producer. As part of the deal the new owner will continue to produce Kodak’s Sonora plates while being able to use Kodak technology on its own brand of plates produced at the Xiamen plant.

The deal, described as a strategic relationship, covers the Republic of China, Taiwan and the special autonomous regions of Hong Kong and Macau. It aims to increase the adoption of the Sonora process-free plate in China which has lagged behind North America and Europe in take up.

The deal has absorbed John O’Grady, who heads Kodak's print products division, for several months. And he is cock a hoop at its completion. “We are excited to work with HuaGuang to advance the conversion of China’s print market to process-free plates and help print industry customers, and those they serve, lower their environmental impact,” he says.

The Kodak Sonora will be the premium brand while Huaguang’s will be able to sell the technology under its own brand against the Kodak distribution network which has been handling increasing demand for Sonora. The plate will continue to be produced at the same factory, though under different ownership.

The Kodak deal follows on from previous cooperations between the two dating back to the heyday of graphic arts film. This has built up trust between the two companies, paving the way for this deal. Zhang Tao, president of Huaguang says: “The new cooperation with Kodak can speed up the conversion of offset plates to process-free plates in China, which will promote the process of green environmental protection in the printing industry in China.”

The Chinese government, ultimate owner of Huaguang, is pushing to reduce environment impacts of industry. The Xiamen factory dates only to 2006 making it one of the most modern in operation. The opportunity is there to grow volumes to meet demands for process-free plates.

The deal with Kodak follows a year after the same Chinese company struck a deal to manufacture and market plates for Agfa. That was described as a strategic alliance and was intended to lead to deeper cooperation.

The announcement preceded publication of Kodak's second quarter results. These were boosted by $313 million received for its flexo division used to repay a $395 million loan due this year, with the help of a $100 million convertible loan due for repayment in two years. The Sonora plate business increased 24% compared to Q2 last year and annuity revenue from Prosper was up 9%.

However, revenue continues to ebb away from the print products division which was down around 10% to $207 million ($227 million) for the three months. Overall revenues were 5% lower at $316 million ($332 million) on a constant currency basis. The business reported a $14 million loss for the first six months, compared to a $26 million deficit for the first six months of 2018.

By Gareth Ward

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Sonora remains one of Kodak's key products with 25% this most recent quarter compared to the equivalent a year ago. The deal with Lucky Huaguang is intended to increase penetration into the Chinese market.

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