EMI axes 1,800 jobs in shake-up

Nick Goodway12 April 2012

ONE fifth of the workforce or 1,800 people at EMI, the world's third largest music company, will lose their jobs as the long awaited review of its troubled Recorded Music business was unveiled today.

EMI said the vast majority would have gone by the end of this month and the rest by the end of September. The cuts are spread across 50 countries and EMI could not say how many would be in Britain, although a spokesman said: 'No one country will take a big hit.'

The cost of this huge shakeout, which has been implemented by new music chief Alain Levy six months into his job, will be a higher-than-expected £110m. On top of this the group is writing off £92m on loss-making investments and has already announced a £38m charge for ending its disastrous contract with US singer Mariah Carey.

That takes the total exceptional-charge for the year to £240m, which will wipe out pre-tax profits which the group confirmed again would be £150m in the year that ends this month compared with £260m last year.

EMI, headed by Eric Nicoli, also said it would slash its dividend in half, cutting last year's payout from 16p to just 8p. It also held out no promises for the future, saying it would 'consider the level of dividend in the light of progress within the business'. Nicoli said the job cuts and restructuring should achieve annual savings of £98.5m by the year that ends in March 2004. This is slightly less than the £100m analysts had been expecting.

The heavily-indebted company said it would launch a £500m bond issue later this year as part of its plans to reduce its £1.1bn debt burden. In the meantime it has renegotiated its debt with its banks including an £800m facility and £500m bridging loan ahead of the bond issue. Adding in an existing £350m US bond, that gives it access to £1.65bn of debt capital.

Nicoli said: 'Alain Levy and his team have made an impressive impact on our Recorded Music business in a short time. The restructuring plans revealed today, will transform the performance of this part of our business. This improvement, together with with the dependable earnings stream from our excellent EMI Music Publishing business, will put EMI back on a growth track.'

The market remained sceptical with EMI shares, which had run up by 10% in the last week, back down 6p at 340p.

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