Kodak financial results Q2 2020 hit by Covid-19

US$ 95 million debt turned into Kodak shares

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Sonora X
Kodak’s new Sonora X process-free plate suitable for longer press runs Photo: Kodak

Kodak’s sales of US$ 211 million in Q2 of 2020 are down by 30% from US$ 304 million in the same period last year. The company used US$ 29 million of its cash, due to the impact of the Covid-19 crisis. Kodak ended the quarter with a cash balance of US$ 180 million, down from the 31 March 2020 cash balance of $209 million.

“During the second quarter, we used US$ 29 million of cash, primarily due to the impacts of the Covid-19 pandemic on our business. While the Covid crisis affected our second-quarter sales volumes, we anticipate improvement in both sales volumes and working capital in the third quarter,” said David Bullwinkle, Kodak’s CFO. “Additionally, subsequent to quarter-end, the company significantly reduced its debt as holders of the 5.00% Secured Convertible Notes due November 2021 exercised their right to convert an aggregate of US$ 95 million of principal amount of the Notes into shares of Kodak stock, reducing the remaining outstanding amount to US$ 5 million.”

The Notes converted into shares may well become a part of the SEC insider trading investigation of Kodak’s share price rising manifold just before the official announcement on 29 July 2020 of the US government’s IDFC US$ 765 million loan to Kodak for manufacturing pharma ingredients.

Kodak’s mainstay business of offset plates took the biggest hit in Q2, with sales declining by slightly more than a third from US$ 181 million to US$ 119 million. Sonora plate sales fell 9% on a year to date basis, and by 33% compared to Q2 of last year. The Sonora Xtra plate, a new version of the Sonora process-free plate, is expected to be available commercially by the end of 2020. In its new product announcement, Kodak said the Sonora Xtra is faster in imaging, more robust, and has better image contrast than the Sonora.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

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– Naresh Khanna

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