Photographic equipment maker Eastman Kodak Co. (EK) announced Thursday morning that profit for the third quarter climbed from last year, on higher margins and lower expenses, despite a 5% revenue decline. On continuing operations basis, the company's profit soared three-fold. The company also cut its revenue growth forecast for fiscal 2008.
In a statement, chairman and chief executive officer, Antonio Perez said, "Despite the global economic weakness, Kodak was profitable in the third quarter, maintained strong liquidity, and held or improved our market position in key businesses, reflecting the benefits of the company's multi-year transformation."
Third Quarter Results
The Rochester, New York-based Eastman Kodak reported net earnings of $96 million or $0.33 per share for the third quarter, higher than $37 million or $0.13 per share in the prior-year quarter.
Earnings from continuing operations climbed more than three-fold to $101 million or $0.35 per share from $32 million or $0.11 per share in the year-ago quarter.
On average, five analysts polled by First Call/Thomson Financial predicted the company to report earnings of $0.28 per share.
Results for the latest quarter were positively impacted by a total benefit of $40 million or $0.13 per share, primarily including a $0.31 per share gain relating to certain changes to the company's post-employment benefits, which was partially offset by restructuring and rationalization costs of $0.16 per share. Similarly, results for the year-ago quarter were negatively impacted by restructuring costs of $101 million after tax or $0.31 per share.
Worldwide sales for the quarter declined 5% to $2.41 billion from $2.53 billion in the same quarter last year. Six Wall Street analysts had a consensus revenue estimate of $2.53 billion.
Segmental Details
Kodak's revenue from digital businesses rose 2% to $1.641 billion, driven by strong year-over-year increases in digital capture, consumer inkjet systems, and document imaging products. However, revenue from the company's traditional business decreased 18% to $764 million on continued declines in Film Capture and Traditional Photofinishing.
Sales for the Consumer Digital Imaging Group grew 7% to $820 million from last year, due to growth in Digital Capture and devices as well as consumer Inkjet systems volumes. The group's earnings from operations were $23 million, higher than $18 million in the year-ago quarter.
The company's Graphic Communications Group sales declined 2% to $821 million from the prior-year quarter, while earnings from operations for the group dropped to $23 million from $36 million in the year-ago quarter.
Film, Photo finishing and Entertainment Group revenues were $764 million, 18% lower than the year-ago quarter, hurt by decreased sales volume of Film Capture and Traditional Photofinishing. Earnings from operations for the group fell to $77 million from $113 million in the comparable quarter a year ago.
Other Metrics
Gross margin for the third quarter increased 80 basis points to 27.5%, due to changes in post-employment benefits along with increased intellectual property licensing revenues, favorable foreign exchange, and cost reduction initiatives.
Selling, general and administrative expenses were $363 million, down 14% from the year-ago quarter, while as a percentage of revenues also it declined 160 basis points to 15.1%.
The company ended the third quarter with cash and cash equivalents of $1.84 billion, nearly flat with that at the end of the year-ago quarter.
During the quarter, Eastman Kodak repurchased about 14 million shares of its common stock at an aggregate cost of $219 million.
Nine-Month Highlights
For the nine-month period, Eastman Kodak reported net earnings of $476 million or $1.66 per share, higher than $461 million or $1.60 per share in the year-ago period.
Earnings from continuing operations for the period were $187 million or $0.65 per share, compared to loss from continuing operations of $297 million or $1.03 per share in the prior-year period.
Worldwide sales for the year-to-date period declined 1% to $6.98 billion from $7.08 billion in the same period last year.
Outlook
For fiscal 2008, the company now expects total revenue to decline in a range of 3% to 5%, down from the prior growth guidance of up to 2%. Digital revenue growth is anticipated between 1% and 4%, reflecting its strong performance in the first half of the year. Previously, Kodak forecasted digital revenue growth in the range of 7% to 10%.
The company noted that it remains confident of its strategy to counter today's challenging economic climate and to take full advantage of the recovery, when it comes. Among the strategies to strengthen operations, the company intends to focus more on its portfolio of investments, intensifying the emphasis on generating cash, and aligning cost structure to the new economic realities. These actions will better position Kodak to manage through this economic environment.
Stock Quote
In Thursday's regular trading session, EK is trading at $11.16, up $0.32 or 2.95% on a volume of 0.19 million shares. In the past 52-week period, the stock has been trading in a range of $9.36 to $29.08.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.