Eastman Kodak reports losses for the first quarter

Kodak’s sales totaled US-$ 2.89 billion in the first quarter, up 2 percent from the same period last year. Digital revenue increased 29 percent to US-$ 1.62 billion, while traditional sales declined 20 percent to US-$ 1.257 billion. Digital earnings were a negative US-$ 37 milion, compared with a negative US-$ 51 million in the year ago quarter.

Kodak’s Film & Photofinishing System unit recorded sales US-$ 916 million, down from US-$ 1.27 billion in the year ago quarter. Earnings from operations were US-$ 29 million, down from US-$ 71 million in the same period last year. Consumer Digital sales declined 10 percent to US-$ 498 million, with a loss from operations of US-$ 94 million, compared with the year ago loss of US-$ 58 million. According to Kodak, this primarily reflects higher retailer inventory on an industry wide basis, previously announced price reductions for thermal media and increased depreciation charges due to the asset usefull life changes made in the third quarter of 2005, partially offset by a year-over-year improvement in digital capture earnings.

Sales of the Graphic Communications Group were up 136 percent to US-$ 870 million, reflecting the acquisition of Kodak Polychrome Graphics and Creo. Earnings from operations increased by US-$ 65 million from a loss of US-$ 34 million last year to earnings of US-$ 31 million in the first quarter of 2006.

Sales in the company’s Health Group were down seven percent to US-$ 585 million with earnings from operations of US-$ 46 million, compared with US-$ 78 million a year ago.

Eastman Kodak has announced that it is exploring strategic alternatives for its Health Group and has retained Goldman, Sachs & Co. as its advisor. “Our stated corporate goal is to be among the top three in each of the businesses in which we compete,” said Kodak’s Chairman/CEO Antonio M. Perez. “While the Health Group is enjoying strong organic growth in elements of its digital portfolio, such as digital capture solutions and healthcare information solutions, we have been observing for some time consolidation in this industry. Given our valuable assets and the changing market landscape, we feel that now is the time to investigate strategic alternatives.” Last year, Kodak recorded revenues of US-$ 2.7 billion in its Health Group, whose portfolio includes digital x-ray capture, medical printers and x-ray film.