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Kodak has sharp 2Q gain
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July 15, 1998: 9:42 a.m. ET
Earnings jump 17 percent as cost cutting yields picture-perfect results
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NEW YORK (CNNfn) - Aggressive cost cutting and beefed-up productivity sent Eastman Kodak's second-quarter earnings surging 17 percent, walloping Wall Street expectations and brightening the outlook for the film maker as it struggles to develop a new corporate image.
Net income at the Rochester, N.Y., maker of cameras, copiers and film rose to $495 million, or $1.51 a diluted share, from $368 million, or $1.11 a diluted share, in 1997's second quarter. The latest results include a pre-tax gain of $66 million, or 13 cents a share, from the sale of a portion of the company's equity stake in Gretag Imaging.
Excluding the gain, earnings were $429 million, or $1.38 a share, a 17 percent rise and still well ahead of Wall Street analysts' forecasts of $1.13 per-share profits.
Revenues slipped 4.9 percent to $3.7 billion from $3.89 billion, due in part to losses associated with the formation of Kodak Polychrome Graphics, the reclassification of certain promotional expenses, and a strong U.S. dollar.
Operating earnings in Kodak's Consumer Imaging segment jumped 16 percent to $404 million from $348 million in the comparable period a year ago. Sales in the segment declined 5 percent to just over $2 billion, from $2.12 billion, dragged down by weak foreign exchange, pricing pressures and the reclassification of some expenses.
Kodak said sales volume grew 2 percent, spurred by continuing growth in the company's Advantix family of advanced photographic system products, domestic gains in sales of color film and growth in photofinishing services.
Earnings in Kodak's Commercial Imaging segment rose 24 percent to $251 million from $202 million a year ago. The company attributed the rise to benefits from portfolio adjustments and a "substantial reduction" in digital operating losses.
Kodak's buoyant earnings figures come as the company is cutting 19,900 jobs, or 20 percent of its payroll, through the end of next year as part of a broader divestment of underperforming businesses aimed at reducing overall costs by $1.5 billion.
Kodak shares (EK) rose 7-1/4 to 81 early Wednesday on the New York Stock Exchange.
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Eastman Kodak Co.
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