Revenue, profits down but digital sales triple.
Rapid growth in digital music sales and multi-million shifting album releases from Robbie Williams, Joss Stone and Norah Jones failed to arrest the expected drop in full-year EMI Group profits and revenues.
In a result largely blamed on unspecified "underperforming" key second-half releases and the rescheduling of two frontline releases, EMI today (May 24) said group sales fell by 8.4% to £1.94 billion ($3.54 billion) for the year ended March 31. At constant currency rates, the decline was 5.1% compared with the same period last year.
Today's results were largely in line with the company's earlier forecasts. In an April note to investors, EMI said it anticipated profit before tax, amortisation and exceptional items of about £141 million ($265 million) for the year ended March 31, vs. £163.3 million ($298.6 million) in the previous 12 months. "There were no shocks or surprises," says one London-based analyst.
Executives at the London-based major affirm their positive outlook on the company's prospects. "Although clearly with profits down, and not sparkling results, we feel that the company is in good shape," comments EMI Group chairman Eric Nicoli.
"Certainly with the albums that slipped out last year to appear earlier this year we feel that we are going to start the new fiscal year with some decent momentum," says Nicoli. "We feel good about the release schedule in both divisions in the year as we look forward.”
Investors have been braced for the results since EMI warned earlier this year that album releases from Coldplay and Gorillaz would be pushed into the following financial year. The albums are follow-ups to a pair of international hit sets which EMI says yielded combined global sales of some 15 million units.
Coldplay's delayed album, "X&Y," is slated for a June 6 international release on Parlophone, and on the following day in North America on Capitol. Gorillaz' new release "Demon Days" arrives today in the United States on Virgin, after opening yesterday internationally via Parlophone and Capitol.
The postponed releases and a "challenging year" at its North American business contributed to an overall slide in sales at EMI's recorded music division. EMI Music reported market share gains at its businesses in the U.K & Ireland, Continental Europe, Australasia and Latin America. Overall, the recording division's market share fell to 12.9% from 13.5% as it registered an expected constant-currency sales decline of 7.5%.
EMI Recorded Music amassed £1.54 billion ($2.8 billion) in revenue, down from £1.72 billion ($3.14 billion). Recorded music operating profit rose to £124.8 million ($228 million) from £14.7 million ($26.8 million).
EMI's commitment to the online music market continued to generate returns during the financial year. The company's digital music sales tripled to £49.7 million ($90 million). "EMI Music is aggressively pursing the digital market," the company says. Digital sales now represent 2.5% of group revenue and accounted for 3.5% in the fourth quarter.
On another high note, EMI Music Publishing reported "strong growth in both sales and profits" during the financial period.
Music publishing delivered £400.7 million ($732 million) in revenue, up from £397.9 million ($727.6 million). The division generated £57.4 million ($104 million) in operating profit, against £45.4 million last time.
EMI also said restructuring plans had saved £10 million ($18.2 million) more than expected, with £35 million ($64 million) in cost savings registered during the year.