1998 Annual Report, “Focus”
(1999 Grand Award winner International ARC Awards)
I was with this project from the inception—interviewing a dozen of the most senior executives (including the CEO) in Rochester, and dozens of line-of-business professionals by telephone. Then I boiled my research down to create copy that described this complex international company as concisely as possible.
Pictures fill a special need. Whether displayed in a frame, pasted in a photo album, or posted on the Web, pictures enrich our lives—as memories, information, and entertainment.
From vacation snapshots to news events captured by advanced digital cameras, from film for award-winning motion pictures to digitized family photos for an online “slideshow,” the products and services Kodak creates preserve our precious memories, inform us about the world, and entertain us from movie theaters to theme parks.
Kodak’s focus on pictures—with new products, a strengthened market position, and strategic investments for growth—will deliver more shareholder value as we help consumers and business customers “Take Pictures. Further.”
from the Letter to the Shareholders …
Cost-Reduction Enables Growth
All Kodak employees are working vigorously to improve performance and reduce costs.
Our cost-reduction focus in 1998 allowed Kodak to improve operating margins, despite strong price competition. In one year, we achieved nearly 75% of the $1 billion in net cost savings we had pledged to make over a two-year period. We recently increased that pledge to a total of $1.2 billion, thanks in part to the world-class performance of our aggressive, revitalized purchasing operation.
Reducing cost is an integral part of our growth strategy and how we do business—as important an ingredient in the Company’s operations as silver halide or computer chips….
Emerging Markets Will Generate Growth
Few areas of the world have experienced more difficult conditions recently than the developing markets of Asia, Latin America, and Eastern Europe.
Revenue growth in our Greater China region, including Hong Kong and Taiwan, was down 10% in 1998. Excluding Japan and China, Asia as a whole was down 32%. Latin America declined 3%; Russia dropped 41%.
Kodak has made significant commitments to those markets. Here’s just one reason why we believe it’s important for Kodak to keep doing business there:
In 1997, China was our third-largest market for consumer film. Even though our sales volume dipped in 1998, China remains an important market for Kodak. Consider this: The average Chinese household takes fewer than 18 pictures a year—less than half a roll of 36-exposure film. But when the average Chinese household starts using one whole roll of film a year, it will be like adding another entire market the size of Germany.
We believe that in perhaps 10 years, China could become the world’s largest picture market. That’s why we agreed early in 1998 to make a $1 billion investment there. We will work with our Chinese partners to upgrade and modernize China’s film and color paper industry, so we can build a profitable picture business together.