Sonora sales jump as Kodak closes in on flexo sale

By Jo Francis, Monday 12 November 2018

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Kodak is now negotiating with a single party over the sale of its flexo business and expects to seal the deal in Q4.

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Flexcel NX volumes grew by 17% during the quarter

Speaking as the manufacturer announced its Q3 results, chief executive Jeff Clarke said the firm was “in advanced negotiations on an exclusive basis” to sell its Flexographic Packaging Division, and expected to sign a definitive and binding sale agreement in Q4.

Kodak put the $150m (£116.5m) turnover business up for sale in August.

In the three months to 30 September, overall sales at the manufacturer slipped by 2% on a constant currency basis to $371m. Adjusted operational EBITDA doubled from $11m to $22m on the back of cost-cutting efforts, operational improvements, and strengthening of Kodak’s product portfolio, Clarke said.

Sales at Kodak’s Print Systems Division, its largest business unit, were down $12m to $217m, while operational EBITDA increased by $1m to $12m.

Kodak said that increases in aluminium costs and tariffs had resulted in a $6m hit, and if that were excluded, operational EBITDA would have been up by $7m.

Volumes for Sonora process-free plates jumped by 17%, and Clarke said that more than 600 customers have now signed up to use the new Sonora X plate having tested the product, including a large customer in the US that currently uses nearly a million square metres a year of processed plates.

“In Q4, we expect our sales volume of Sonora X plates to accelerate with a greater conversion of large volume accounts in process plates. We expect approximately 40% of Q4 process free unit sales will be Sonora X and on a full year basis we expect Sonora X will represent 25% of process free unit sales,” Clarke stated.

Sales at the Enterprise Inkjet Division were up $6m to $39m on the back of higher sales of Prosper equipment and consumables. Prosper annuities were up 9% and the unit posted EBITDA of $2m.

Clarke said Kodak shipped evaluation kits for its new Ultrastream high-speed inkjet technology during the quarter, and commercialisation was “on track” for next year. It invested $3m in Ultrastream during the period.

Rising sales of Flexcel NX plates contributed to a $4m increase in sales to $36m at the up-for-sale Flexographic Packaging Division, where EBITDA rose by $3m to $8m. NX plate volumes were up 17% during the quarter. The new Flexcel NX Ultra product was announced last month.

Sales at the Software & Solutions Division, which includes Prinergy, were flat at $21m, and the business broke even.

A decline in sales of Unified Workflow solutions was offset by an increase in business at the Kodakit marketplace for photographers.

“We're continuing to make focused investments in packaging and digital workflow software as well as cloud and analytics services which are important enhancements to our portfolio of offerings,” Clarke said.

Kodak’s Advanced Materials and 3D Printing business cut its losses from $6m to $2m year-on-year, on sales of $1m.

Last month it launched a new fabric for wide-format digital printing applications that incorporates Kodalux light control technology. Clarke said that it eliminated the carbon layer typically used in existing blackout technologies.

Kodak’s Consumer & Film Division lost $2m on sales down $1m on a like-for-like basis at $48m.

Chief financial officer David Bullwinkle said cost-cutting plans aimed at saving $37m a year would include 325 redundancies across the group, with 90 made already and plans in place for a further 220 positions that will go.

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