Digital sales exceeded traditional sales for the first quarter of 2006 with an increase of 29% to 870m ($1.616bn). Traditional sales declined by 20% to 670m. Total sales were 1.55bn.

Eastman Kodak chairman and chief executive officer, Antonio Perez, said the acceleration of digital earnings during March had increased the firm's confidence for a "solid full-year performance".

"We now expect to achieve profitability in our entire digital portfolio during the third quarter, a full quarter sooner than last year," Perez said.

Eastman Kodak also announced it would restructure its manufacturing operations so that business units could work more directly with their assigned manufacturing operations.

"Our goal has been to dedicate to our business units the resources they need to build on their success and operate in an autonomous manner," said Perez.

"Kodak is now a digital company, and these actions are required to support our business model," he added.

The firm's restructure, to support its metamorphosis from a film to a digital firm, was first announced in 2004 and included the loss of up to 25,000 jobs, 18,900 of which have already been cut.

"As a result of the rapid and effective actions we have taken over the past two years to restructure our manufacturing assets, we can increasingly assign responsibility for manufacturing to the business units," Perez said.

"In one sense, this marks the last break with the economy of scale manufacturing model that served our company so well for more than 120 years." he added.

Eastman Kodak expects to complete most of the restructure by 1 July.

Proposed changes
- Global Manufacturing and Logistics (GM&L) and co-ordinating business units to be integrated

- Chief Administrative Office disbanded; CAO Charles Brown to retire

- Director of GM&L, Daniel Meek, and the Kodak Operating System director, Charles Barrentine, to retire

- Former GM&L operations will report to leaders in the business units

- John Robinson to be vice-president of Global Manufacturing and Supply for Graphic Communications Group