Kodak Health Group sales down

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Eastman Kodak Company Tuesday reported that sales for its Health Group fell 6 percent in Q2 2006 to $655 million. Earnings from operations for the segment were $78 million, compared with $109 million a year ago. The company attributes this drop to declines in price/mix, higher silver costs, costs associated with the company’s exploration of strategic alternatives for its Health Group, and other factors.

The decrease in revenue, Kodak said, was partially offset by revenue and earnings growth in digital capture, digital dental and healthcare information solutions and service and manufacturing productivity gains.  Digital earnings were $42 million in the second quarter of 2006, compared with $53 million in the year-ago quarter.  Health Group operating margins returned to 12 percent for the second quarter of 2006, in line with the company’s expectations.

Overall, Eastman Kodak Company reported a second-quarter GAAP net loss of $282 million, largely stemming from restructuring charges ($214 million after taxes) and rising silver costs. The company claims that these results are consistent with its plan, announced in 2004, to create a digital business model by restructuring its traditional businesses and the associated manufacturing. The company’s second-quarter 2006 GAAP pre-tax earnings were essentially unchanged from the previous year.

Additionally, Kodak provided an update regarding its ongoing restructuring efforts with the goal of building a business model to achieve sustained success in digital markets. This program will likely see the elimination of an estimated 25,000 positions and charges totaling $3.0 billion. 

During the second quarter of 2006, the company eliminated approximately 1,630 positions, bringing the program’s total to-date to more than 20,500 positions relative to the estimated 25,000.

Based on the restructuring actions completed to date, Kodak expects that employment reductions and total charges will now be within the range of 25,000 to 27,000 positions and $3.0 billion to $3.4 billion, respectively.  Kodak expects that these actions will be essentially complete by the end of 2007.