EMI out-sells rivals but share price still falls

EMI outperformed the music industry last year and gained market share but its shares still fell more than 12 per cent, hit by a market keen to take profits but also worried about growth prospects.

EMI outperformed the music industry last year and gained market share but its shares still fell more than 12 per cent, hit by a market keen to take profits but also worried about growth prospects.

The music company's annual results saw sales fall 1.4 per cent to £2.1bn in an industry down 5.6 per cent. Eric Nicoli, the chairman of EMI, said the company was forecasting that the market for recorded music would be flat to down by 4 per cent for the current financial year.

However, music publishing did show some growth, up 1.1 per cent to £397.9m, while EMI's revenues from legitimate music download services, trebled to £15m. The company said industry efforts to contain piracy were now having a positive impact.

However, Alain Levy, EMI's head of recorded music, called for technology companies to work together to design more open platforms for the various download services that are being launched.

There was a danger that download services were being built with proprietary technology that might exclude some music company's content being available or stop consumers moving tracks from one device to another, so called inter-operability, limiting the attractiveness of digital services.

"Interoperability is one of the most important elements for us," said Mr Levy. "It is hugely desirable and it will speed up consumer acceptance of digital services."

EMI has made a submission to the EU's Competition Commission over the proposed merger of Sony Music and Bertelsmann Music Group (BMG). The possibility of Sony using the two companies' combined roster of artists to drive take-up of its own music-download services to the exclusion of other music companies is understood to be EMI's main concern with the proposed merger.

Mr Nicoli said: "We are interested in understanding the impact of the connection of the record companies to Sony's technology which may slow down the development of the online business."

EMI's accounts, littered with exceptional items and accounting adjustments, produced a net loss of £71.6m against a profit of £234.2m the year before.

This included a £138.3m charge attributed to a cost-saving reorganisation in its record label business.

At the end of March, the company announced it was cutting 1,500 jobs to deliver cost savings equivalent to £50m a year. Group operating profit was down 0.8 per cent at £249.3m although its operating profit margin was 11.8 per cent, up 0.1 per cent on the year before. EMI said this was the best margin performance in the music industry.