Kodak sales slip as fresh boss lays out plans
Tuesday, April 2, 2019
Kodak expects to complete the sale of its Flexographic Packaging business as soon as next week, with new boss Jim Continenza pledging to return the business to financial health after it reported disappointing results for 2018.
For the 2018 calendar year overall sales came in at $1.33bn (£1.02bn), down 4.4% on the prior year and below expectations which had been for revenues of between $1.5bn-$1.6bn.
The group posted a net loss of $16m compared with net earnings of $94m the prior year.
The red ink included a $7m loss attributable to the Flexographic Packaging division, which was classified as discontinued operations in the figures. However, a Kodak spokesman said that this was not a trading loss, but was due to additional charges related to the impending sale of the unit.
Continenza, who became executive chairman in February when former CEO Jeff Clarke departed, said that Kodak expected to close the sale of its flexo business “as early as April 8th”.
“The Flexographic Packaging division sale will be an important step in improving our balance sheet,” he stated.
The proceeds from the sale, expected to be up to $390m, will be used to pay down some of Kodak’s $395m in outstanding debt. Chief financial officer David Bullwinkle said the firm was also in “advanced negotiations” to refinance its remaining debt.
The results were also complicated by exceptionals, including a $100m income tax gain in 2017. “Excluding current and prior year exceptionals, the 2018 loss was $30m compared to income of $16m in the prior year,” Bullwinkle said.
“We generated cash in the fourth quarter of 2018 and delivered strong performance in our key growth areas of Sonora Process Free Plates and in Prosper inkjet annuities,” he stated.
Sales at Print Systems, Kodak’s largest division, fell by 5% to $895m, while operational EBITDA almost halved, falling from $49m to $27m on the back of “competitive pricing pressures, lower volumes and higher aluminium costs”.
Enterprise Inkjet sales slipped by 5.6% to $136m, although operating EBITDA improved to $4m from $3m.
Sales at Software & Solutions were effectively flat at $84m (2017: $85m) and the unit broke even.
Consumer & Film sales fell from $198m to $189m, while losses increased from $18m to $19m. Sales at the embryonic Advanced Materials & 3D Printing business unit quadrupled to $4m, and its losses were cut from $27m to $14m. Eastman Business Park brought in revenues of $17m (2017: $16m), but operational EBITDA fell from $4m to $3m.
The Flexographic Packaging division posted sales of $148m, up $3m on the prior year.
Kodak said it planned to focus future product investment in the “growth engines” of Sonora, Ultrastream, Advanced Materials and 3D Printing and Software and Services.
Continenza said: “As we work to return Kodak to financial health, we will not make forward looking statements, instead we will take action by focusing on our core competencies in printing imaging, working closely with our customers, deleveraging our company and improving operational efficiencies to achieve our primary goal, generating free cash flow on a consistent and sustainable basis.”
He said the firm’s priorities would be to “increase operational efficiency and focus on core competencies to achieve our growth objectives”.
The results filing also reveals that Clarke will receive a $2m severance payment, the equivalent of two years’ of his base salary.
Kodak shares fell to $2.87 in after-market trading following the results announcement (52-week high: $6.40, low: $2.20).