A strong end to 2010 gave Universal Music Group a 9.9% increase in revenue in the fourth quarter, according to financial details released by parent company Vivendi. It was the third straight year-over-year increase in quarterly revenue. Full-year revenue rose 2% and digital revenue increased 13.8%.
Why such a healthy year-over-year increase when other companies' revenues are falling? Success with strong releases certainly played a part. But revenue in the fourth quarter of 2009 went way down to 8.2% compared to the same quarter in 2008, meaning revenue only rebounded to its 2008 levels. That alone is an achievement, however. When you consider that flat is the new up, it is notable that Universal achieved basically the same fourth quarter revenue in 2010 that it did two years earlier.
Revenue rose to €1.52 billion (US $2.1 billion) in the fourth quarter of 2010. At constant currency, which removes the effects of currency fluctuations, revenue was up just 2.2%. Earnings before interest, taxes, depreciation and amortization (EBITDA) were €227 million (US $314 million), down 27%.
In contrast to sales trends across the industry, Universal's fourth quarter revenue was better than what it posted in 2009 (€1.39 billion) and 2008 (€1.51 billion). But it's keeping a smaller percentage of that revenue. The quarter's 14.9% EBITDA margin was lower than those in the fourth quarters of 2009 (22.5%), 2008 (18.4%) and 2007 (18%) and 2006 (18.8%).
For the entire year of 2010, the world's largest music company posted revenue of €4.45 billion (US $6.15 billion), up 2% from 2009. However, at constant currency Universal's 2010 revenue was down 3.6% compared to 2009. Earnings before interest, taxes and amortization were €471 million (US $650 million), down 18.8%.
The earnings release of parent company Vivendi highlighted a number of items that took away from the revenue gains: changes in sales mix, restructuring costs and write-downs of underperforming assets. No details were given as to which assets had their value written down during the year.
Vivendi posted revenue of €8 billion (US $11 billion) in the fourth quarter of 2010, up 5.3%, and €28.9 billion (US $39.9 billion) in 2010, up 6.4%. The unit with the biggest revenue gain was Maroc Telecom Group, up 4.5% in 2010. Activision Blizzard posted the best improvement in EBITA with a 40.7% increase in 2010.