Kodak Q2 revenue down

By Max Goldbart, Friday 11 August 2017

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Kodak has recorded a further fall in revenue for Q2 2017, while reporting an improvement in Prosper annuities and Sonora plate volumes.

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Annuities revenue for Prosper grew by 14% on the same period last year

In its Q2 results for the year to 30 June 2017, the group recorded an overall sales decline of 10% on the same period last year, from $423m (£326m) to $381m, while net profit fell from $8m to $4m. 

Operational EBITDA before corporate costs for the quarter fell 18%, from $44m to $36m, while the group ended the quarter with a decreased cash balance of $370m, reflecting the use of cash in working capital items such as inventory increases for sequential revenue growth.

In a webcast on Wednesday (9 August), Kodak chief executive Jeff Clarke said: “Performance was within expectations for the first half of the year but we expect to see a higher proportion of revenues, earnings and cashflows into the second half.”

In its Enterprise Inkjet Systems Division (EISD), which encompasses Prosper, and also the Versamark business, revenues were down 20%, from $44m to $35m, while operational EBITDA rose to $3m, from a $4m loss last year.

However, Prosper delivered annuity growth of 14% over the last quarter while in the year to 30 June, the Prosper Imprinting System install base rose to 1,364, leading to a revenue increase of 29% to $54m. The EISD is expected to break even or be profitable this year.

Kodak had announced its intention to sell off its Prosper and Ultrastream inkjet operations in March 2016 with a sale sought by the end of the year, but after reportedly receiving numerous offers the company decided to retain the business. The decision was partly due to improved performance of its Prosper business and positive reaction to its Ultrastream technology.

Clarke said that the group expects continued strength throughout 2017 in the area and also issued an Ultrastream update. 

“In the past three months, Ultrastream has passed major developments,” he said.

“Concurrent with the development of Ultrastream technology, EISD continues to advance negotiations and is in active negotiations with interested OEM partners.”

In its Print Systems Division (PSD), its largest, revenues declined by 9% to $236m, with operational EBITDA falling from $34m to $29m.

Kodak put the decline in the main down to pricing pressure and the higher cost of aluminium, the primary material for the division’s plate products. Kodak’s Sonora plates delivered strong performance, with an 18% volume increase on the same period last year, now accounting for 18% of the division’s total plate unit sales. 

Clarke added: “Overall plate buying for the quarter was down 3%, which we believe indicates we maintained our market share position.

“We expect to increase share and volume improvements in the second half of the year and to continue to see growth in our Sonora plates. We expect Sonora growth to accelerate in 2018 beyond the 2017 numbers due to a series of investments we are making, which will improve the products’ feature set." 

Its newly developed Flexographic Packaging Division, which includes its Flexcel NX plates as well as other packaging businesses, increased sales 12% to $37m. The increase was put down to strong performance driven by Flexcel plate sales.

The group updated its 2017 outlook to reflect the impact of an expected advanced technology transaction. It continues to expect revenues of $1.5bn to $1.6bn but adjusted EBITDA forecast was revised down to between $90m and $105m. 

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