EMI raises profit forecast after sale fears recede

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The Independent Online

EMI provided some better news on its profitability yesterday after the disappointment of February's profits warning, which sent the music group's shares reeling.

EMI provided some better news on its profitability yesterday after the disappointment of February's profits warning, which sent the music group's shares reeling.

The company said it expected to report pre-tax profits of about £141m for the year to 31 March, having previously told investors profits would be £138m.

The slightly better-than-expected profits have resulted from a less sharp decline in music sales.

In February, EMI delivered a shock to the market by saying that two key album releases from Coldplay and Gorillaz would be delayed. It also said music sales in general were lower than expected in January.

While the two new releases have still missed the year-end deadline, music sales in general have proved slightly better than expected in February and March. EMI said the fall for the full year would now be 7.5 per cent, rather than the previously expected 8 to 9 per cent.

It has been a difficult past 12 months for the music group's investor relations. In November EMI sounded more bullish than it had for years when it announced half-year results, insisting it was more positive about the outlook for the music industry than at any time in the previous three years.

It predicted it would improve on the 7.2 per cent decline in sales it had seen in the first six months of the year when it came to deliver full-year results.

But the subsequent warning on sales and profits in early February sent the shares crashing 16 per cent, angering shareholders who had been expecting good news for the year as a whole.

Yesterday's slightly more upbeat news left the EMI share price unmoved.

Patrick Yau, a media analyst at Bridgewell Securities, said: "While this looks like a positive move for earnings, this comes at a cost, with margins in the recorded music division being diluted in an environment of further CD price erosion."

The next 12 months could provide better news for EMI as sales across the industry in general are stimulated by a number of new albums from traditional big-selling names including Coldplay, Oasis, Stevie Wonder, Jamiroquai, Bruce Springsteen, Cream and Van Morrison.

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