The confidence in its outlook was reflected by chairman and chief executive Daniel Carp, at a briefing to market analysts.

Carp said that as a result of its continued focus on the restructuring strategy announced last year, faster growth was being seen in digital markets.

Sales of digital products and services are expected to increase at an annual growth rate of 36% between 2003 and 2007, having previously been predicted to grow by 26% for the same period.

This will enable the firm to reach its target of total sales of 8.8bn ($16bn) by 2006.

"Our digital sales are increasing steadily so we expect by next year, that the company's profits will be higher than in 2004," said Carp.

The turnaround comes almost a year after a near shareholder mutiny, led by Providence Capital president Bert Denton, when Kodak's share value slumped to a 20-year low after the restructuring plans were unveiled.

Investors have reacted positively to this latest news, with shares up by 56 cents a share to $32.23.

Carp said that Kodak expects to generate more than 50% of its revenue from digital imaging services and products by the end of next year, with earnings set to grow steadily.

Kodak is investing more in technologies that require limited investment and hopes to reap the benefits from the intellectual property of its ink-jet technologies, such as Stream.

The change in fortunes follows last year's restructuring, which saw Kodak focus more on the digital print sector.

Story by Andy Scott