EMI'S "DISAPPOINTING" YEAR

EMI’s annual report, released Tuesday (5/21), contained more couching than IKEA. In it, the British music company took pains to assure stockholders that its overhaul was proceeding with all due haste, and that it expected to deliver an improvement in operating performance this year after the cataclysm of 2001.

The company posted a net loss of 191 million pounds ($278.6 million) for the fiscal year ended March 31, compared with a net profit of 91.9 million pounds for the prior fiscal year. Revenue was 2.45 billion pounds, down 8.5% from 2.67 billion pounds the previous year.

While glowingly optimistic about the new strategic direction for EMI Recorded Music, the report doesn’t attempt to disguise the fact that the division had what it termed "a very disappointing year." In a global music market that decreased 6% in value, EMI Recorded Music’s sales fell by 11.1% to 2.03 billion pounds, while operating profit dropped by 63.5% to 83.1 million pounds. Global marketshare decreased by 0.7% to 13.4%.

In his statement, EMI Group Chairman Eric Nicoli freely admitted the company’s failures. "But it was also a year when music publishing and…our U.K. labels…achieved great success," he pointed out. "At a strategic level, we took swift action to address the weaknesses in our Recorded Music division, introducing a new management team under Alain Levy and implementing a far-reaching restructuring plan."

EMI posted a sharp but expected 40% fall in adjusted pre-tax profit and said its radical overhaul was going to plan in spite of an industry ravaged by an economic slowdown and piracy. EMI said its pre-tax profit before amortization and exceptionals was 153.3 million pounds ($224 million) for the year to end March, compared with a previous 260 million, Reuters reports. Including exceptional charges and stripping out the contribution from HMV Media, the company made a pretax loss of 152.8 million pounds, compared with pretax profit of 254.4 million pounds the previous year. Exceptional charges of $242.4 million pounds included restructuring costs of around $100 million pounds and almost $40 million pounds related to the signing of Mariah Carey, who was released from her contract in January after delivering just one album in a five-album deal.

But the flotation of retail chain HMV Group, part owned by EMI, will bring in 143 million pounds in cash, which the company will use to pay down its debt of 1.1 billion pounds.

Levy, Chief Executive of recorded music, and David Munns, his second-in-command, are battling to shore up EMI's position amid a declining global market and the growing threat from Internet piracy.

Levy said Tuesday that EMI expects flat recorded-music sales in the current financial year, and that it expects total market sales to show between 2.5% contraction and 2.5% growth. Levy said EMI's new-release schedule, which includes records by Coldplay, Atomic Kitten and Massive Attack, should help revive the fortunes of the company, according to Reuters.

In addition, EMI told reporters in a conference call it was just starting talks about re-signing top British performer Robbie Williams, whose contract expired in February.