Eastman Kodak Co. today reported a 12 percent jump in fourth-quarter sales as rising digital revenues, which now account for more than half of all sales, more than offset the decline in traditional revenues. However, the company posted a net loss of $52 million, or 18 cents a shareâ€”its fifth quarterly loss in a rowâ€”largely due to restructuring costs.
The result was a slight improvement from a year ago, when Kodak lost $59 million, or 20 cents a share. And it easily topped analystsâ€™ expectations. Excluding restructuring charges and other onetime items, Kodak earned $151 million, or 51 cents a share, versus analystsâ€™ consensus estimate of 39 cents a share.
Kodak shares closed Monday at $25.75, down 2.4 percent. Digital earnings of $161 million reportedly disappointed some investors.
Sales in the quarter totaled $4.197 billion, up from $3.759 billion a year ago and slightly higher than expectations. Digital revenue totaled $2.67 billion, a 45 percent increase from $1.85 billion. Traditional revenue fell to $1.51 billion, a 21 percent decline from $1.91 billion.
For the full year, Kodak reported a net loss of $1.37 billion, or $4.76 a share, compared with net earnings of $556 million, or $1.94 a share, in 2004. The loss stemmed largely from a $1.1 billion non-cash charge in 2005 related to its ongoing restructuring. Sales were $14.27 billion, up 6 percent from $13.52 billion.
In 2005, digital sales accounted for 54 percent of total revenue, marking the first time in the companyâ€™s history that digital exceeded traditional revenues.
â€œKodak is now a thriving digital company,â€ said Antonio Perez, chairman and CEO, in a statement. â€œWe are now more than halfway through our transformation, and we have proven our ability to drive sales in digital markets and to generate the cash necessary to fund our growth.â€
In addition to releasing its fourth-quarter and full-year results, Kodak today reported year-end employment figures. On Dec. 31, the company employed 14,100 people in Rochester, down from 16,300 the year before. The areaâ€™s top employer, the University of Rochester, on Dec. 31 had 17,199 staffers, with 14,498 employed full-time. Full-time equivalents totaled 17,339.
Kodak has 51,100 employees worldwide and 25,500 in the United States.
The photo giant also announced that Chief Financial Officer Robert Brust plans to retire when his employment contract expires at the end of January 2007. The company will launch a search to replace him that will include internal and external candidates.
For 2006, Kodak expects total revenue to be in a range of a 2 percent decline to a 4 percent increase. The company projects increasing digital earnings to a range of $350 million to $450 million, with total earnings from operations of a negative $900 million to a negative $1.1 billion.(Kodak later issued a correction, adjusting its projected total earnings from operations to a negative $500 million to a negative $850 million.) The loss from operations would largely result from the ongoing restructuring actions.
The company expects investable cash flow to be $400 million to $600 million. In 2005, it was $728 million.
â€œWe enter 2006 with solid momentum and a stronger emphasis on profitable growth,â€ Perez said. â€œOur focus this yearâ€”beyond digital revenue growth and cash generationâ€”will be expanding the margins of our digital businesses.â€
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