British music giant EMI Group Plc issued its second profits warning in six months on Tuesday and saw its stock fall 14 percent in early business as the downturn in the global music industry continued to weigh on company.
EMI, which had warned last September that full-year profits would dive 20 percent, said pre-tax profit before goodwill and exceptionals for the year to March 31, 2002, would be about 150 million pounds ($213 million).
This compares with current market forecasts ranged between 160 and 207 million pounds.
“This is a disappointment for us all,” Chairman Eric Nicoli said in the trading statement.
Shares in EMI, which have recovered from a year low of 206 pence hit last September in the wake of the first warning, were marked down 14 percent to 280 pence in pre-opening trade, which values the group at around 2.24 billion pounds.
The stock has outperformed the media and photography sector by more than four percent in the past 12 months.
The world’s third biggest music company last month severed its ties with pop diva Mariah Carey, just four months after the flop of her first release on the label, paying her $28 million to walk away from one of the biggest-ever recording contracts.
EMI, involved in two failed merger attempts with fellow music majors Warner Music and BMG, has been forced to overhaul its business in an industrey facing sluggish growth as CD replacement sales fade and piracy bites.
The group’s new recorded-music boss, Alain Levy, who has been looking to extract cost savings from the sprawling group, said while missing its target was not good news, the key for EMI was how the group shapes up for the future.
“We are in the middle of a major redesign of EMI Recorded Music which will result in a reduction in our cost base, but will also make us more efficient and more competitive in order to drive growth,” Levy said in the trading statement.
The group also announced the appointment of Roger Faxon, previously chief financial officer of EMI Music Publishing, as group chief financial officer.