EMI on the way up, Guy Hands tells staff
Says company has seen 'dramatic improvement'LONDON -- Guy Hands has informed staff at EMI that the music major is on target to deliver "significant cost savings" after generating in excess of 100 million pounds ($199 million) in its first quarter.
In an internal memo, obtained by Billboard.biz, Hands rallies his troops to continue the work which, he said, has underpinned a "dramatic improvement" for its bottom line. The London-based company's recorded music division achieved earnings before interest, taxes, depreciation and amortization of 59.2 million pounds ($118 million) against a loss of 45.1 million pounds ($89.8 million) in the corresponding period in 2007, Hands notes in the document.
Revenue during the first quarter rose 61% to 288.1 million pounds ($573.8 million), explained Hands, a figure that does not even pack the full sales punch from Coldplay's global hit "Viva La Vida," which was released late in the period.
Hands' message is a means to update staff on what has been a tumultuous period of restructuring within EMI's recorded music division. As part of his sweeping redesign, Hands told staff in January that between 1,500 and 2,000 positions would be made redundant.
"We now have in place a reshaped organizational structure, with clearer accountability for profit and loss," Hands said. "We have introduced and now mainly implemented the previously announced changes and improvements to the way we run our business, and are on target to achieve significant cost savings. And there has been a massive reduction in waste."
A legion of top executives have since gone out the door, replaced with a blend of new faces and trusted hands, many of whom come from outside the industry, including the newly appointed EMI Music CEO Elio Leoni-Sceti. As part of his overhaul, completed at the end of June, Hands himself has stepped aside from his chairmanship of EMI into a nonexecutive function.
One good quarter, however, does not mean EMI has evolved into the land of milk and honey. And though Hands is adamant that the company can build on its new structure, and that its solid early 2008 performance is welcome news, he admitted the market has a volatile nature. "We have come a long way this year, but of course, there is still much to do. The problems facing the music industry cannot be solved in a few months," Hands said.
"However, it is already clear to me that what is emerging at EMI is not only a far leaner organization, but a more focused and effective one as well, and better aligned with the interests of our artists. An organization that is becoming much better placed to serve artists and customers alike, and to give our talented people the opportunity and the tools to produce their best work."