Sales of film-based cameras continue to decline

The film maker, which has struggled to adapt to the transition to digital photography, said digital sales could grow 37% a year up to 2007.

Kodak recorded a sharp rise in third quarter profits although sales from its traditional film business fell.

The firm is aiming to cut its workforce by 12,000 over the next three years.

The cost-cutting will result in the loss of 600 UK jobs.

Digital boom

Kodak previously said it was expecting 26% annual growth in digital sales over the next three years.

The firm has now revised that figure on the back of encouragingly strong sales of digital cameras, which rose 41% over the period.

Kodak's third quarter profits were ahead of market expectations although sales growth was limited.

Including exceptional costs from the sale of a subsidiary business, Kodak made a pre-tax profit of $479m compared with $122m for the same period last year.

Stripping out exceptional costs, however, pre-tax profits actually fell $20m to $226m.

Total sales rose 1% to $3.36bn but this masked a mixed performance across the group's operations.

Sales of film, single use cameras and other traditional products fell 20%.

However, sales of digital products - including X-ray systems, commercial printers and phone kiosks - shot up 39%.