Kodak's second quarter results show a continued expansion in its growth products, continuing decline in products that are mature and a decision to pull out an area where there is little prospect of ROI.
The ongoing reshaping of the portfolio makes direct comparison difficult and CEO Jeff Clarke says that the results have Kodak within its own projections for the year. Sales are expected to be around $1.5 billion, but expectations of Ebitda are trimmed by $15 million to between $90-105 million.
Second quarter revenues were down from $423 million to $381 million, a drop of 10%. Operational Ebitda was $14 million, $9 million lower than in the same period a year ago.
The bald figures hide the growing importance of the Sonora, Prosper and Flexcel NX product lines in generating revenue and profits for Kodak. These account for 27% of the sales, up 4% from last year. “These growth areas are our highest priority,” says Clarke.
Despite a global decline in plate volumes, put at 3% by Kodak, Sonora volumes increased to 18% of Kodak’s plate volumes, an 18% growth in a year. There are further expectations of growth next year as new versions of the processes plate are added to the portfolio. However, rising aluminium prices hit earnings in the division.
Sales in the Print Systems Division fell 9% to $236 million. Kodak blames a combination of aluminium prices and pricing pressure.
Its three run for cash businesses: Versamark, Digimaster and the consumer inkjet business, were also 9% lower than a year ago. However, these will stay in the portfolio even if Kodak is no longer investing in product development. Its copper mesh touch screen business on the other hand is being wound up, following the earlier decision to cease development of silver mesh touch screen technology.
The Enterprise Inkjet Systems Division, including Versamark, reported revenues of $35 million for the quarter, an 18% decline from the $44m reported in 2016. While Prosper has been returned to the fold, the strategy of selling presses has switched to selling ink and supplying printheads. Annuity revenue growth for Prosper rose 14% as more pages were pushed through the 60 or so presses in use.
As a result, the division recorded a $1 million Ebitda profit, an improvement of $8 million in the year.
The Flexcel NX plate was also a star performer with a 22% year of year increase in volumes for the flexo plate with revenues up 12%. The flexographic packaging division provided a $2 million gain to $37 million for the quarter with $8 million of Ebitda.
The great hope remains Ultrastream where Kodak is hoping to announce firmer partnerships as a result of delivering assessment kits before the end of this year. It remains confident that the technology can be commercialised by 2019.
The Ultrastream remains a long term jewel for Kodak but in the meantime, growing revenues from Prosper annuities, expanding sales of Sonora and Flexcel NX plates are helping drive Kodak's figures forwards, even if market conditions remain tough.
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