'Challenging year for EMI': $466 mil loss

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NEW YORK -- Music major EMI Group Plc. on Monday reported weaker financials for its fiscal year ending March 31, saying its underlying revenue fell 15.8%, or 12.1% assuming constant currencies, driven by a weak recorded music market and U.S. sluggishness.

The company posted a profit from operations of £150.5 million ($207 million), down 39.9% from £250.5 million a year ago. EMI said its bottom line before tax swung to a loss of £263.6 million ($466.6 million) from a year-ago profit of £118.1 million. After tax, the latest fiscal year's £288.5 million ($568.8 million) loss compared with a year-ago profit of £86.1 million.

Revenue fell from £2.1 billion a year ago to £1.75 billion ($3.5 billion). EMI said its recorded music unit saw revenue decline 15% at constant currency, while its music publishing division reported a 0.9% decrease.

EMI's overall digital music revenue increased 46.5% from £112.1 million to £164.2 million ($323.7 million) on a reported basis, accounting for 9.4% of total revenue.

The company said its recorded music unit saw operating margin fall from 8.7% a year ago to 3.3%, "driven primarily by lower sales reflecting tough industry conditions and an unprecedented level of stock returns."

CEO Eric Nicoli said "this has been a challenging year for EMI Group primarily as a result of the worsening market conditions, which affected the entire recorded music industry with revenue declines in every major music market across the world."

He said a previously announced restructuring will focus the company on future growth opportunities, especially in the digital space.

"We believe that digital sales will continue to grow strongly," he said. "We remain confident about our long-term future: while current trading conditions are difficult, consumers' appetite for music has never been greater."

He also signaled confidence in EMI's recent strategy to make its music available without digital rights management software. The company predicted Monday that this "will boost sales of digital music and help unlock the many opportunities of the digital market."
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