Kodak has its fifth loss-making quarter in a row

Kodak has its fifth loss-making quarter in a row

	Published : Tue, 31 Jan 2006 17:00 By : Richard Owen Print this Story

NEW YORK: Photography company Eastman Kodak Co. posted its fifth consecutive quarterly loss Monday warning it may lose up to $1.1 billion more in fiscal 2006.

The 125-year-old company, which is the top maker of photographic film and in the process of migrating to digital products and printing services, lost $52 million in the fourth quarter. This compares with a loss of $59 million in the corresponding previous year period.

The company, however, recorded a 12 per cent increase in sales at $4.197 billion, against $3.76 billion last year.

Kodak said excluding one-time items, including an income tax refund that boosted its profit by $243 million, it earned $151 million.

The company's profits in its digital products -- at $161 million, hit by shortfalls in its health-imaging business -- were lesser than market expectations. Sales of digital products were 54 per cent of total revenue in 2005, exceeding sales from film, paper and other chemical-based businesses for the first time.

Analysts said the figures do not convey the exact fiscal health of the company, as it cuts manufacturing assets and jobs on the one hand and expands through acquisition on the other. Nevertheless, the warning about loss of $900 million to $1.1 billion during the year is disappointing and indicative of the slow progress it is making towards a turnaround. There is all likelihood of a heavy spending on restructuring for yet another year even as it faces decline in cash from sales of film, paper and other chemical-based products.

Kodak has been in the process of transforming to a digital products company, as demand for its film and paper products are on the wane. It has also been cutting costs, mainly through a reduction in its staff strength by as much as 25,000.

However, while the restructuring is on, sales of its film products came down 21 per cent to $1.5 billion, while earning fell 27 per cent in its health group. Consumer digital camera and related sales rose 41 per cent, while sales in the graphic communications segment more than doubled to $942 million, boosted by recent acquisitions.

For the full year of 2005, the company lost $1.37 billion, or $4.76 a share, compared with a profit of $556 million, or $1.94 a share, in 2004. Revenue rose 6 per cent to $14.27 billion from $13.52 billion.

The company expects the digital sales to grow by 16 per cent to 22 per cent in 2006, but its overall sales will range from a decline of 2 per cent to a gain of 4 per cent. Digital profits could increase to $350 million to $450 million, but there could be an overall operating loss of $900 million to $1.1 billion.

The company's chairman and CEO Antonio Perez said Kodak is now a thriving digital company. "The fourth quarter marked the first time that we managed the company as it will be run in 2006, and the digital earnings performance was exceptional."

Kodak shares slipped 87 cents, or 3.3 per cent, to $25.50 in New York Stock Exchange.