Sonora boosts Kodak results

Jo Francis
Tuesday, March 17, 2015

Kodak’s Sonora processless plate business grew by 212% year-on-year and the company is set to add 15 million square metres of manufacturing capacity for the plate in 2015.

Announcing the group’s fourth-quarter and year-end results, Kodak chief executive Jeff Clarke said: “We are seeing plate growth volume for the first time since 2011 and clearly we are taking market share from our competitors, both majors and regionals.”

Kodak now has more than 2,000 customers using the plate, with some 800 signed up since last September.

“In the last five months we have created almost 40% of the existing Sonora customer base. We can charge a premium for Sonora because the value proposition is so strong,” Clarke added.

The firm is adding 15m sqm of Sonora production capacity with a new manufacturing line at its plant in Columbus, Georgia, to serve the American market. This is part of the consolidation of its plate manufacturing operations, which also resulted in the decision to shut down its UK plate manufacturing plant in Leeds.

“Sonora growth will offset the decline in legacy products,” he added. “We added about 7m sqm of plates last year and expect a similar amount this year.”

However, Kodak is absorbing the increase in aluminium costs in its plate business due to competitive price pressures.

Clarke also highlighted the positive performance of its high-margin Flexcel NX plate and CTP business for the packaging market, and its high-speed inkjet presses.

Flexcel plate volumes increased 38% and the firm had an installed base of more than 400 units at the year-end.

Kodak installed eight Prosper inkjet presses in 2014 taking the installed base to 39. It expects a further 25 presses to go in this year.

“Prosper page volume continues to increase dramatically,” Clarke stated. “Our 2015 page volume was up 50%, reaching 5bn printed pages.

“It does take a while to get them ramped up and when we put these presses in there are a lot of services costs so they go in at breakeven or even a loss. But we are willing to go for the longer-term ink burn in this case.”

Kodak lost about $40m (£27m) on its inkjet business last year before corporate costs, but Clarke expects it to move to breakeven “and perhaps a little beyond” this year.

This was Kodak’s last set of results under its old divisional structure, with the new organisation announced in December coming into effect from 1 January.

In the fourth quarter losses reduced from $57m to $41m, including $44m of restructuring charges and write-offs, on sales down 13% at $529m.

Kodak just reached the lowest end of its sales projections for the full year, posting sales of $2.1bn (2013: $2.35bn).

The net loss for the year was $118m, effectively a like-for-like improvement of $411m on the prior year performance, which was boosted by a one-off exceptional gain of $2.5bn.

Gross margins for the year increased from 20.8% to 21.7%, and jumped from 16.1% to 20.6% in Q4.

Clarke said that overall the reshaped company was making “significant progress”.

“I’m excited about the real opportunity to drive apples-to-apples improvement, and about the many things we’re seeing in our pipeline,” he stated.

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