Kodak to incur hefty charges on Prosper restructuring

Kodak has announced the streamlining of costs on its Prosper business, which could incur charges of up to $17m (£13.8m), as efforts to sell the inkjet operation continue.

Kodak announced in late 2016 that hopes for selling its Prosper business before the close of the year had faded and that discussions with potential buyers would now continue into 2017.

As a result of this latest restructuring decision, Kodak expects to incur charges of between $12m and $17m. 

These will include $5m-$7m relating to separation benefits, $5m-$6m of non-cash related charges for inventory write-downs, $2m-$3m of non-cash related charges for asset write-offs and up to $1m in other cash-related charges associated with the action.

In order to account for the charges, Kodak expects that approximately $3m-£5m of total charges for separation benefits will require cash expenditures and the remainder will be provided from the company’s pension plans in the form of special termination benefits.

In a statement, Kodak said: “As announced in December, Kodak is streamlining its commercial inkjet operations to maximise performance and address market opportunities in publishing, high volume direct mail and packaging. In addition, the company is planning to refocus the business to emphasize print head components and the development of Ultrastream technology.”

The manufacturer announced plans to sell off Prosper, including the new Ultrastream technology, last March. It will retain the legacy Versamark operation.

Details on the disposal process remain confidential but Kodak chief executive Jeff Clarke announced, with its Q3 results last November, that he hoped it would make a “significant realisation on the sale”. Kodak posted an 11% year-on-year sales decline in its Q3 results. 

Away from Prosper, Kodak also announced yesterday (18 January) that it will be increasing the price of some of its digital printing plates for the Chinese markets by between 4% and 6%, effective from 1 March 2017. 

“For months Kodak has been absorbing increases in the costs of raw materials and energy, and as a direct result of these cost pressures in the manufacture of plates, we are taking the necessary step of raising our prices for certain plates,” said Kodak print systems division president Brad Kruchten. 

It is unclear whether this price increase will be rolled out to the rest of the world or whether it will affect the UK market. 

Kodak will be exhibiting at PrintWeekLive!, which takes place on 8 and 9 March 2017 at the Wasps Arena, Coventry

Kodak’s share price was $14.85 at the time of writing (52 week high: $17.29, low: $7.56). 

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