12 May 2014 Printing/Print Company Profiles

Kodak signals green light for growth

Jeff Clarke, Kodak's new CEO, is excited by the prospects of running the 100 year old business like a well endowed start up.

THIS IS KODAK'S YEAR OF TRANSITION, newly appointed CEO Jeff Clarke has told analysts after the company posted a net loss of $36 million for the first quarter. This will be wiped out by the end of the year by which timeKodak will be at break even thanks to the weighting of sales in the printing industry towards the second, thanks to increasing ink and plate sales as installations of Prosper and Flexcel units continue and thanks to a first contribution from the new functional printing operation.

Already sales of plates are starting to pick up with April’s volumes showing growth over the same month a year ago. Kodak is setting great store by Sonora its newest process free plate. A new line is in operation at the plant in Germany and a line at the Columbus, Ohio, factory is being converted to produce the plate.

THE PROSPECTS FOR SONORA ARE JUST one element for Clarke's decision to join Kodak. "I met the board and I was inspired by their vision," he said in London last week. "I had been working in Silicon Valley and as an angel investor with interests in 50 companies you are always looking for the one that could be the next Kodak. It's how do you invest in a company that could become a $1 billion business. Kodak could be that opportunity. Unlike others I had been investing in which had good technology but no brand, no distribution network, no management, and have to find good engineers in competition with the likes of Google, Kodak had all this. It can become a $1 billion business in packaging, in digital printing and functional printing as well as a $1 billion business in plates and a growing $100 million business in workflow."

Workflow is forecast to grow 10% this year while FlexCel flexo plate installations will exceed 400 (and will drive sales of plates), there will be more than 40 Prosper installations by year end and more than 1,000 Prosper heads in operation, and plate sales are starting to rise, helped by both the growing economy and the appeal of the process free Sonora. Hence Clarke's optimism that Kodak will have its loss making days behind it by the end of the year. "Our sales will be flat year on year," he says. "But more importantly the growth in sales in the second half will put us on a trajectory for 2015 which is quite exciting."

IN THE FIRST QUARTER, SALES WERE down 18% compared to Q1 in 2013, from $594 million to $482 million. Around half of this is due to the decline in what Clarke defines as the mature businesses, its consumer inkjet and commercial film arms which are being run for cash. Around 4% is from the commercial print sector, three quarters of which is a volume impact and 1% to price competition. “This is within our expectations,” says the new CEO.

He has spent much of his time on the road, meeting Kodak people and customers. We met last week between a meeting with St Ives, one of the key Prosper accounts in the world, and an interview with the Financial Times and then Kodak's team at Watford. He had on an earlier trip visited the Kodak European head quarters in Switzerland.

CLARKE BRINGS TO KODAK EXPERIENCE in running manufacturing supply chains, gained at HP, and from running a large sales force and in enterprise sales, which most capital investment for printers amounts to. And unlike when running sales for Computer Associates selling software applications to enterprise customers against Microsoft, HP and IBM, the deal for the print business is always more intimate. He explains: "When I go to a printer we are almost always his largest expenditure, in the US a $30 million company might spend $4 million with us which after paper, energy and labour is the largest outlay. So when it comes to his strategic vendor, we are it. This is the intimacy that Kodak has with its customers."

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Jeff Clarke sees Kodak as a much bigger business.

Jeff Clarke sees Kodak as a much bigger business.