Warner Music avoids Q4 blues
Company reports profit increase of 20%NEW YORK -- Warner Music Group reported better-than-expected fiscal fourth-quarter results Tuesday, and management believes that the company can outperform peers amid worsening sales trends.
Chairman and CEO Edgar Bronfman Jr. on a conference call also lauded the music business for having been "relatively resilient in previous (economic) downturns" but said he couldn't promise things would stay that way in the current economy.
Asked what drives the renewed weakness in music retail, Bronfman suggested it "is not really due to a reduction in floor space but lower traffic in the stores." He added that WMG is "happy with our product and the results of our product."
CFO Steve Macri, though, renewed a warning that WMG's new fiscal year will be backend loaded. "The volatile global economy and timing of our release schedule may result in backend weighted fiscal 2009 results," he said.
Bronfman on Tuesday also said all of WMG's planned holiday season product is or will be out as planned. Other labels, particularly Vivendi's Universal Music Group, have seen delays in key releases that were scheduled for the year-end period.
WMG reported a quarterly profit of $5 million, up 20% from the year-ago quarter. Wall Street analysts had expected a loss. Revenue declined 1% to $854 million.
Major sellers in the quarter included album from Metallica, Kid Rock and T.I.
Digital revenue rose 28% over the year-ago to $167 million but only edged up $1 million from the previous quarter. While WMG said digital sales now make up 20% of total revenue, Bronfman said that "physical declines are not yet offset by digital growth."