Eastman Kodak's ROCE Trend Suggests a Compounding Machine

Eastman Kodak's ROCE has increased to 10% over the past five years, driven by a combination of higher earnings per dollar of capital invested and a 36% increase in capital employed. The company's returns on capital employed have grown, indicating opportunities for investment and potentially leading to a multiplication in value over the long term.

Eastman Kodak Company (NYSE: KODK) has demonstrated a significant improvement in its Return on Capital Employed (ROCE), rising to 10% over the past five years. This increase is primarily driven by a combination of higher earnings per dollar of capital invested and a 36% increase in capital employed. The company's enhanced ROCE suggests opportunities for investment and potential long-term value multiplication.

Revenue and Operational Performance

For the second quarter of 2025, Kodak reported a decline in revenue to $263 million, down 1% year-over-year (YOY) [1]. This was largely due to higher aluminum and manufacturing costs, partially offset by price increases [2]. The company's operational EBITDA also fell by 25% to $9 million, driven by lower volumes and higher costs [2].

Advanced Materials & Chemicals Segment Growth

Kodak's Advanced Materials & Chemicals (AM&C) segment showed revenue growth and achieved FDA certification for pharmaceutical manufacturing [1]. This segment is expected to drive future growth and contribute to the company's long-term strategy.

Financial Outlook and Challenges

Kodak plans to focus on serving customers and developing growth businesses in the second half of 2025, while also assessing the potential impact of new tariffs on its business [1]. The company is committed to U.S. manufacturing despite the uncertain business environment. Kodak aims to reduce costs and convert investments into long-term growth in H2 2025 [2].

Cash Flow and Going Concern Assessment

The company's cash balance decreased to $155 million at the end of Q2 2025, driven by capital expenditures and higher operational costs [2]. Kodak has included a disclosure regarding its going concern assessment, indicating substantial doubt about its ability to continue as a going concern [2].

Conclusion

Eastman Kodak's improved ROCE over the past five years, driven by increased capital employed and higher earnings per dollar of capital invested, presents opportunities for investment and long-term value creation. Despite the challenges in the second quarter, the company's focus on growth and cost reduction suggests a strategic approach to navigating the current business environment. Investors should closely monitor Kodak's progress and future financial performance.

References:
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_PLX6B61C3:0-eastman-kodak-q2-revenue-down-1/
[2] https://investor.kodak.com/news-releases/news-release-details/kodak-reports-second-quarter-2025-financial-results