second-quarter earnings dropped from a year ago, but came in well ahead of the estimate the company offered just last month. At the same time, the film giant said it will eliminate up to 9% of its workforce in a bid to fight weakening consumer demand for film and keep costs down.
In the three months ended June 30, the company earned $112 million, or 39 cents a share, when calculated using generally accepted accounting principles. A year ago, Kodak earned $284 million, or 97 cents a share. Kodak said cost-reduction actions resulted in pretax charges of $54 million, or 13 cents a share, in the quarter.
Kodak had earnings, excluding cost reductions and certain other items, of $172 million, or 60 cents a share, compared with last year's $250 million, or 86 cents a share. Analysts were expecting 29 cents a share.
On June 18, the company forecast 25 cents to 35 cents a share. The company attributed the difference to "a more favorable sales mix" of health-imaging and traditional consumer products and services. The company also said the results were aided by strong performances from joint ventures and a lower-than-expected tax rate.
Revenue was flat at $3.35 billion, as digital cameras lowered demand for for film. Excluding foreign exchange rates, sales fell 6%.
"Our traditional consumer film and processing operations continue to face challenges associated with the increasing popularity of digital photography, as well as persistent economic weakness, continuing price pressure and an associated decline in travel and tourism," Chief Executive Daniel A. Carp said in a written statement.
Total worldwide sales of consumer film products fell 6%, with a 13% volume decline. Meanwhile, total worldwide sales of consumer digital cameras rose 65%.
Aiming to Save
For the remainder of 2003, Kodak said it will continue to cut costs. Citing economic softness, a shifting mix of products and international conflicts, the company now expects earnings of 25 cents to 65 cents a share for the second half of the year. Before items, Kodak projected a profit of 85 cents to $1.15 a share.
Analysts are looking for earnings of 53 cents in both the third and fourth quarters, for a total of $1.06 a share. The company earned $1.04 a share in the third quarter last year and 65 cents a share in the fourth quarter.
Additionally, the company said it will cut its total employment by 6% to 9%, or 4,500 to 6,000 jobs, starting later this year. The reductions will affect the company's administrative, manufacturing, research and development, consumer imaging and professional operations. Kodak had 70,000 employees at the end of 2002.
Kodak will record charges related to the job cuts totaling $350 million to $450 million in the next 12 months, and the company hopes to save $300 million to $400 million a year. The company forecast savings of $275 million to $325 million in 2004.
Shares of Kodak were climbing 6.8%, or $1.56, to $26.15 in Instinet premarket trading.