EMI strikes a cheerful note

MUSIC giant EMI rang out a new tune today, saying the market for recorded music is about to show its first upturn since 2000.

First signs that the music industry is beginning to beat internet pirates and cash in on new ways of selling music - such as mobile phone ringtones - led chairman Eric Nicoli to view the current year with confidence.

Norah Jones, Coldplay and Robbie Williams were among the 20 artists on EMI labels who sold more than one million copies of their albums last year.

Nicoli said that, while the group recorded music sales fell 2% in the year to end-March, EMI had outstripped an industry which saw sales drop 5.6%.

Headline pre-tax profits fell 8.7% to £163.3m, on turnover down by 2.5% at £2.12bn. But, after a string of extraordinary charges - including those incurred for getting rid of 600 staff and dropping 290 artists - the group swung from a pre-tax profit of £324m to a loss of £52.8m. The dividend is unchanged at 8p.

Nicoli said: 'Our efforts to contain piracy are having a positive impact and we are experiencing exciting growth in legitimate digital music. For the first time in several years, there are encouraging signs of market improvement, particularly in the US, the world's largest music market.

'While some regions remain difficult, we expect the overall global music market to perform better this year than last.'

For the first time, EMI made money from new ways of selling music. Nicoli said: 'Legitimate digital music, such as downloads and mobile ring tones, became a meaningful revenue stream.'

The US business was the key driver of recovery in the recorded music unit under Alain Levy, with artists Joss Stone and Keith Urban helping drive a 'substantial improvement in profitability'.

Towards the end of the year, the group announced it would outsource CD manufacturing and cut out smaller, underperforming artists to save £50 million a year. Around half that should be saved in the current year.

On the digital side, Apple's iTunes is now selling songs at an annualised rate of 170m a year. EMI generated £15m of digital music sales in is financial year, showing an acceleration each month.

The European Union will shortly declare its verdict on the planned merger of Sony Music with German group BMG. EMI revealed today its abortive deal to merge with Warner Music last autumn cost £7.9m in fees, taken as an extraordinary charge.

Strong cash flow saw the group's net debt cut by £111m over the year to £749m.

Norah Jones led EMI's best-seller list, producing its top two selling albums. Her second album, Feels Like Home, sold some 7.5m copies while her first, Come Away With Me, had sales of 5.5m in the financial year taking its total sales above 17m.

Coldplay's second album, A Rush of Blood to the Head, sold 3.5m copies in the financial year.

editor@thisismoney.co.uk

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