But while adding sales and improving gross margins the high costs associated with the two divisions, including R&D hit profitability in the division that also includes Encad and Kodak Polychrome Graphics.

Losses rose from 548,000 ($1m) to 18m on sales up 99% to 97m.

NexPress delivered 23m of sales for the Graphic Communication n the two months it was part of the division following its acquisition at the start of May.

At Drupa it took orders for over 100 digital presses, a mixture of colour and Digimaster monochrome machines.

Versamark had sales of 25m in the quarter, and is expected to have total sales of 110m for the year.

KPG's earning performance improved during the quarter. Sales of Kodak products to the joint venture remained stable in terms of volume, but the value decreased by 3% due to price reductions.

Overall Kodak reported a strong quarter with sales up 6% to 1.9bn and net income up 38% to 85m.

"Sales continue to increase led by demand for our digital products and services," said chairman and chief executive Dan Carp. "In fact, our digital revenue increased 48% more than offsetting a decline in traditional revenue. The performance of our acquisitions is on target and our balance sheet remains strong."

Story by Barney Cox