07 April 2019 Business

Plates business holds up as Kodak shows scars of prior ambitions

The sale of the flexo plates business will ease Kodak's debt burdens, but leave it reliant on printing systems and plates to drive the business.

A 19% increase in volumes of the Sonora plate could not prevent Kodak declaring an increased loss at the end of the 2018 financial year. In 2018 the company declared a net loss of $16 million compared to net earnings of $94 million for the previous year, on sales of $1,325 million ($1,386 million).

This excludes the flexo plate division whose sales should be completed this week, perhaps as early as today (8 April). This will bring in around $300 million to reduce the company’s $396 million debt that fall due this year. Advanced negotiations to refinance the remaining stub are underway with existing lenders and Kodak, under new CEO Jim Continenza, is confident that the deal will be completed.

Continenza prefers to highlight the 19% increase in volumes of the processes Sonora plate and a 8% increase in annuity revenues from the Prosper enterprise inkjet division. Kodak has ceased the marketing of the Prosper presses, so this increase is indicative of increased use of inkjet resulting in demand for ink and replacement heads. The company also continues to invest in the Ultrastream new generation continuous inkjet, advanced light blocking materials and printed electronics as revenue streams for the future.

None of these, however, can match the print systems division comprising the plates and platesetters and Nexpress for revenue. Plate sales alone account for 58% of the overall revenue with electrophotographic presses responsible of 10% of sales. However, sales in the year fell $47 million (5%) in the year.

Nevertheless the print systems division is comfortably the largest part of Kodak with sales of $895 million in 2018 ($942 million). This produced an operating profit of $27 million ($49 million).

This is the same as the total revenue from the enterprise inkjet division comprising Prosper, Ultrastream and legacy ink and refurbished heads for Versamark presses. Revenue was $8 million lower despite the growth in Prosper annuity income, falling to $136 million ($144 million) with an operating profit of $4 million.

Revenue at the software and solutions division, owner of Prinergy and Colorflow technologies, was static at $84 million ($85 million).

Continenza, who moved from chairman to CEO on the departure of Jeff Clarke, says the priority will be to focus on the core competencies that the company has, (namely plates and prepress) in order to grow the business “and become cashflow positive and build long term value for our shareholders”.

By Gareth Ward

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Plate power

Plate power

Volumes of the Sonora plate family rose 18% during 2018, but revenues from plates could not prevent a 5% drop in sales in the prepress division. Nevertheless litho plates are now firmly the largest revenue generator for Kodak as it prepares for the departure of its flexo plates division.

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