7 February 2005
EMI REVISES ITS EXPECTATIONS FOR CURRENT FINANCIAL YEAR
EMI Group announces a revision in the outlook for its recorded music division's
sales for the financial year ending 31 March 2005. Two major albums, one by
Coldplay and one by Gorillaz, originally scheduled for this financial year will
now be released in the first half of the next financial year. EMI Music's
sales, particularly re-orders, in January have also been lower than anticipated
and this is expected to continue through February and March. Therefore, for the
full year, at constant currency, EMI Music's sales are now expected to be 8% to
9% lower than the prior year.
EMI Music Publishing continues to perform well and in line with expectations.
Given the expectation that EMI Music's operating profit margin pre allocation
of central costs for this financial year will be maintained at the prior year's
level, EMI Group's profit before tax, amortisation and exceptional items
("Adjusted PBT") for the year ending 31 March 2005 will be approximately £138
Alain Levy, Chairman and CEO of EMI Music, said, "We generated good initial
sales from our second half major releases, but given recent re-order levels and
the revised timing of these two major albums, we will now not maintain market
share for the full financial year. While progression in profitable market share
is always our aim, creating and marketing music is not an exact science and
cannot always coincide with our reporting periods.
"In EMI Music, we expect to maintain our operating profit margin for this
financial year, driven by effective cost management and the efficient
implementation of our outsourcing and label restructuring. Our savings from
restructuring are running ahead of schedule and we now expect to deliver £35
million in this financial year, £10 million ahead of plan. The remaining £15
million of savings will be realised in the next financial year.
"While this rescheduling and recent softness is disappointing, it does not
change my views of the improving health of the global recorded music industry.
The physical music market is showing signs of stabilisation in many parts of
the world and digital music, in all its forms, continues to develop at a rapid
Eric Nicoli, Chairman, EMI Group, said "EMI Music's constant currency sales for
the third quarter were ahead of last year. Recently, however, we have seen
softness in our re-orders which we believe is likely to persist over the next
two months. We have also rescheduled two important albums into our next
financial year. These two factors combined have taken us outside our previously
indicated sales range for EMI Music.
"We remain positive about the overall industry trends and EMI's prospects.
Global music market conditions today are significantly stronger than in recent
years and digital music is presenting a very attractive growth opportunity.
Despite recent weakness, we are aggressively managing both of our businesses to
maximise performance in today's market and that of the future."
EMI Group plc
Amanda Conroy Corporate Communications +44 20 7795 7529
Claudia Palmer Investor Relations +44 20 7795 7635
Susie Bell +44 20 7795 7971
Brunswick Group LLP
Patrick Handley +44 20 7404 5959