Sluggish first half hammers EMI

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LONDON -- Music company EMI Group Plc. said Monday that it expects a 34% decline in pretax profits and a slight revenue drop for the first half of its fiscal year ending Sept. 30 because of sluggish trends in its recorded music division, which it expects to reverse in the back-half.

The world's third-largest music company, which carries such acts as Coldplay and Robbie Williams on its books, said that its profit for the first-half of its fiscal year will amount to about ?27 million ($50 million) and to expect a "decline in total revenue of approximately 3% on a currency basis" for the first half.

But EMI said the second half will see a turnaround in fortunes with big releases from Williams, Norah Jones and Moby all expected to bolster revenue and keep the company on track for full-year expectations.

"The year-on-year decline in revenue is due to the phasing of EMI Music's planned release schedule, which, as previously indicated, has a greater weighting to the second half of the financial year than in prior years," EMI said. "After the impact of exchange rate movements over the period, group revenues are expected to decline by close to 5% on a reported basis."

The company said a strong roster of upcoming releases coupled with "strong momentum at EMI Music Publishing and further good progress on the cost savings initiatives" announced in April give its board confidence that EMI is on track to deliver results in line with its expectations for the full year.

EMI Music Publishing is set to report first-half revenue "in line with the prior year" when assuming constant currencies, the company said.

UBS analyst Ian Whittaker called EMI's trading update "a mixed bag," arguing that recorded music revenue trends for the company's first half look stronger than what he expected, while the unit's profitability and music publishing revenue momentum look weaker than he had forecast.

EMI Music's planned release schedule for the remainder of the financial year, which will end March 31, also features albums from Joss Stone, Tina Turner, Moby and a Beatles release that contains new music as featured in the Cirque du Soleil show, "Love," in Las Vegas, the company said.

EMI Music Publishing's second half of the current financial year will include releases from Sting, Kelly Clarkson, Kanye West and Daddy Yankee.

EMI also said digital sales continue to show growth and now account for 9% of revenue for its recorded music division, up from 5% in the same period last year.

In July, EMI and Warner Music Group shelved merger talks hot-on-the-heels of a European court ruling that challenged the marriage of Sony Music and Bertelsmann AG's BMG amid competition questions.

In London, EMI shares ended up 1.6% at ?2.74 ($5.10).

Georg Szalai in New York contributed to this report.
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