EMI Reports Net Loss for First Half

By | November 19, 2004 at 12:00 AM

London – EMI Group PLC, one of the world’s ‘big three’ music companies, reported a fall in sales and a net loss for the first half of its fiscal year Friday but said it expected an improvement in the second half when its album release schedule kicks in.

EMI, whose artists include Coldplay, Norah Jones, Kylie Minogue and Robbie Williams, said it was confident the global music industry was returning to a growth phase after a sales slump from 2000 to 2003.

Chairman Eric Nicoli said the global industry recorded a decline of 1.3 percent for the first half of fiscal 2004, an improvement on the 9.6 decline for the same period in 2003.

“Given the positive overall trend in the global music market over the past year and the expected high levels of release activity across the industry in the months ahead, we are confident that we will see a substantial and very welcome full-year improvement in the performance of the recorded music market,” said Nicoli.

The upbeat outlook sent EMI shares higher on the London Stock Exchange Friday. They were up 7.5 percent in early trade to 224.25 pence (US$4.16, €3.19).

EMI reported a net loss for the six months to Sept. 30, of 400,000 pounds (US$740,000, €570,500), down from a 9.2 million pound profit for the corresponding period in 2003.

Total turnover for the group was 851 million pounds (US$1.6 million, €1.2 million), down from 960 million pounds a year ago.

Nicoli said the 5.4 percent slide in turnover reflected the negative impact of the strong pound against currencies including the U.S. dollar, euro and yen, and the fact that most of the company’s album releases are scheduled for the second half of the year.

He said greatest hits albums from Tina Turner, Robbie Williams and Placebo and a live album from the Rolling Stones – all released in October and November – were selling well.

“We have an especially strong second-half release schedule – in quality as well quantity – and we have already seen a significant year-on-year pickup in our sales since the end of September,” said Nicoli.

“This, along with the strong growth of music DVDs and the explosive growth in our digital market activity, leaves us well placed to maintain our market share for the full year,” he added.

The company reported rapid growth in revenues from new sources such as downloads. It said legitimate digital music revenues quadrupled and now represent more than 2 percent of group turnover.

Bridgewell Securities said it expects EMI’s digital revenues to reach 25 percent of the total in three to five years, and that the company is well exposed to Internet and mobile distribution channels.

Demand in Europe for songs downloaded via computer has surged since computer giant Apple launched its iTunes music store in Britain, France and Germany in June.

Microsoft muscled into the market last month with a rival online store, MSN Music, which enables fans to download songs direct to their mobile phones as well as their computers.

EMI’s Robbie Williams recently became the first artist to put his album, plus videos, on a memory card that can be inserted directly into a mobile handset.

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