EMI Group said today it outperformed the music industry in fiscal-year 2003, achieving robust performances from its North American operations and gaining market share in its recorded music and publish
EMI Group said today it outperformed the music industry for the year ended March 31, 2004, achieving robust performances from its North American operations and gaining market share in its recorded music and publishing divisions.
However, the company's preliminary figures continue to reflect the state of the worldwide music industry. EMI's pre-tax profits for the year declined 8.7% to £163.3 million ($291 million). Group revenues fell 2.5% from the previous year to £2.12 billion ($3.79 billion) and operating profit slipped to £249.3 million ($445 million) from £254.7 million ($491 million).
Investment bank UBS Warburg reiterated its "Buy 2" rating on EMI stock. "Full-year results were marginally below our expectations for revenues and profits due mainly to recorded music sales being -2% versus our estimate of flat," says the financial institution in a statement.
EMI shares closed down 12.15% to 217p today on the London stock exchange.
"Our profits were bang-on market consensus, [and] we outperformed the rest of the music industry in terms of marketshare, up half a point to 13.2% of the global recorded music market," EMI Group chairman Eric Nicoli told reporters during a conference call. "We're pretty pleased with our results relative to the rest of the industry."
Sales at EMI's recorded-music division declined 2% to £1.722 billion ($3.07 billion). Comparatively, the IFPI reported a global market decline of about 5.7% in sales over the corresponding period. EMI singles out its North American business as a major strong point.
EMI music publishing continues to generate strong sales, up 1.1% to £397.9 million ($711 million) during the year, as growth in performance and synchronization revenues more than offset weakening sales from mechanicals. Synch revenues grew by more than 19% from the previous year and now account for 16% of worldwide music-publishing revenues. Overall, music-publishing operating profit slipped to £101.9 million ($182 million) from £103.6 million ($185 million).
During a period described by chairman Eric Nicoli as "the year that saw legitimate digital music take off," EMI saw rapid growth in revenues from its download and ringtones activities. At a group level, sales from digital-music products tripled to more than £15 million ($26.8 million).
"Our efforts to contain piracy are having a positive impact and we are experiencing exciting growth in legitimate digital music," comments Nicoli. "For the first time in several years, there are encouraging signs of market improvement, particularly in the United States, the world's largest music market."
EMI also warned of continuing gloom for the record music industry. "We see the global recorded music market in the year ahead as somewhere between flat and down 4%," Nicoli said during a conference call with journalists. The major expects to at least maintain its market share going forward.
The group posted a net loss of £71.6 million ($128 million), versus a profit of £234.2 million the year before due to a £154.8 million ($276 million) charge tied to its international reorganization and a charge of £16.5 million ($29.5 million) for exiting manufacturing in Europe and the United States. EMI recorded a one-off gain of £209.7 million ($374 million) in the prior year, stemming from the sale of its stake in retailer HMV Group.
"While some regions remain difficult, we expect the overall global market to perform better this year than last," adds Nicoli. "Having gained market share and invested for the future, and taking into account our release schedule and savings program, we view our prospects for the year ahead with confidence."