We are not currently expecting an economic recovery in 2002, but we are factoring in a recovery in 2003

chief financial officer Bob Brust

The firm said it had been hit by the slowdown in the US economy, and the slump in travel following the 11 September terror attacks.

Despite the loss, shares in Kodak rose on Wall Street as the results were not as bad as analysts had been expecting.

By the close of trade, Kodak's shares had gained $1.74 to $28.24.

Difficult times ahead

In October the company warned its earnings would be hit by the economic slowdown, and announced plans to cut 4,000 jobs because of falling demand for film and cameras.

"Our strategy during this difficult economic year has been to strengthen our balance sheet so that the company will be in a better financial position once the recovery begins," said chief executive Dan Carp.

But Kodak warned that it could be some time before this pick-up was seen.

"We are not currently expecting an economic recovery in 2002, but we are factoring in a recovery in 2003," chief financial officer Bob Brust told analysts.

Falling sales

Excluding restructuring and other one-off charges the company's earnings were $36m for the fourth quarter, or 12 cents a share. That was marginally higher than the 11 cents a share predicted by analysts.

Overall sales fell 6% to $3.36bn, dragged down by a slump in film sales.

Sales in its photography division fell 8%, while greater competition pushed down sales of its X-ray film and other health imaging products 3%.