Kodak blames overcapacity for poor pre-press performance in Q4

Net profit also fell dramatically, down 95% to $22m, on the back of a significant decline in sales, which dropped 25% to US$1.9bn.

Kodak blamed its revenue decline in part on “industry related pricing pressures in prepress”, which also affected revenues and profitability at its Graphic Communications Group (GCG) division.

Kodak GCG reported a 3% reduction in revenues to US$757m and a 67% fall in earnings (EBIT) to US$12m, for the three months ended 31 December 2010; gross profit margin also fell from 27% in Q4 2009 to 24.3%.

In its quarterly report, the manufacturer said: “GCG gross profit margin decreased primarily due to unfavourable price/mix within Prepress Solutions, reflecting a continued competitive pricing environment and industry overcapacity for digital plates.”

Chief executive Antonio Perez added: “Despite 4% year-over-year digital plate volume increases, Prepress Solutions revenue declined 6% for the year and 8% in the fourth quarter.

“The decline was primarily due to the competitive pricing environment, especially in Europe, where industry overcapacity continued to have the most negative impact.”

However, a rival plate manufacturer accused Kodak of making excuses. “Yes we’ve got Chinese plates coming into the market and if you let them they can cause you a problem. But that’s just an excuse,” it said.

Kodak’s full-year net sales came in at US$7.2bn (2009: US$7.6bn), on which it made a pre-tax profit of US$59m (2009: $117m loss); however, the firm still made a full-year net loss of US$70m (2009: US$209m).

Kodak’s Q4 results included a US$24m restrusturing and rationalisation charge, of which US$5m was applicable to Kodak GCG.

Perez highlighted the growth across Kodak’s Consumer Inkjet, Commercial Inkjet, Workflow Software and Services, and Packaging businesses, which he said were up 23% in Q4 and 18% for the full year.

He added that the firm’s Prosper press range, which was hit by the withdrawal of its European beta partner last September, was ready to capitalise on the transition to digital printing in the graphics industry.

Kodak’s share price fell more than 30% following last week’s announcement, to US$3.64 at the time of writing.

Read the original article at www.printweek.com.

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