By Max Goldbart, Thursday 09 November 2017
Kodak chief executive Jeff Clarke has called for "immediate action" to cut costs, including shedding 425 jobs, after the company's Q3 results revealed losses of $46m.
For the three months to 30 September 2017, Kodak posted a net loss of $46m (£35.1m), compared with a net profit of $12m this time last year. Revenue slipped 7.8%, from $411m to $379m, and operational EBITDA was down 21%, from $43m to $34m.
In a conference call yesterday afternoon (8 November), Clarke highlighted four key areas in which the business was struggling and announced the 425 job losses, including 100 at its Rochester headquarters.
Clarke said: “Our results are being impacted by a slowdown in the commercial print industry, delays to markets for key programmes and investment in our advance materials and 3D Printing Division, a longer sales cycle for brand licensing transactions and higher costs in our film business.
“We are implementing decisive actions to address these factors.”
Clarke broke down the predicted loss impact on Kodak’s final year results as being $18m due to a the slowdown in commercial print resulting in deferred or cancelled orders, and rising aluminium costs, impacting plate margins; $8m for being behind plans in the commercialisation of advanced materials; $7m due to a longer sales cycle for brand transactions; and $5m due to higher costs in the film division.
Kodak’s predicted EBITDA for the full year has therefore been revised down to between $60m and $65m from Q2’s $90 to $105m, while revenue targets remain at $1.5bn to $1.6bn.
To improve, Kodak has already initiated a 4% to 9% plate price increase, is continuing to accelerate cost actions, which will result in $45m of savings and the loss of the 425 staff, reduced investment in its 3D division, and is initiating a reduction in the number of general investments and the elimination of certain sales programmes that “no longer fit in”.
Clarke said Kodak will continue to invest heavily in flexo packaging applications, plate development, Prinergy software and Ultrastream inkjet development, which has remained with the business after Kodak reversed its decision to sell earlier this year.
“We are actively pursuing divestiture and monetisation opportunities, which will meaningfully change the Kodak portfolio,” he added.
“We are in advanced negotiations with parties for joint partnership. Based on the sensitive nature of negotiations we are not able to comment further on specific business, partners or timelines related to these strategic activities.”
In its Print Systems Division, Kodak posted a fall in revenues of 7.2% to $232m (2016: $250m), while operational EBITDA was down 51.9% to $13m (2016: $27m), with the decline in the main put down to pricing pressures. Sonora plate volumes increased 24%, now accounting for 19% of the division's total plate unit sales.
In its Enterprise Inkjet Systems Division (EISD), revenues were again down, slipping from $47m to $33m (29.8%). However, EBITDA returned to the black at $1m, compared with -$8m in Q3 2016. The Prosper business was said to have delivered solid performance.
The Flexographic Packaging Division, which incorporates Kodak’s Flexcel NX systems and plates as well as other packaging businesses, posted flat revenues and EBITDA of $34m and $7m respectively.
At time of writing, Kodak’s share price was stable at $5.15, having slipped dramatically on 25 October when it fell from $7.30 to $5.62, the same day it issued a statement saying that it was seeking developers for an area of its Rochester Eastman Business Park opposite the renovated Kodak Center.