EMI sounds note of optimism despite shrinking sales

EMI insisted yesterday it would stage a recovery this year after sales of its recorded music declined by almost twice the fall in the global market last year.

The music major, which has still to sign a new contract with last year's top-selling artist Robbie Williams, saw operating profit in recorded musikc collapse by 64 per cent to £83.1m for the financial year ended 31 March.

Eric Nicoli, the chairman, said: "The new strategic direction for EMI Recorded Music, while providing optimism for the future, does not, however, disguise that the division had a very disappointing year."

In that period, the recorded music market decreased by 6 per cent but EMI saw its sales shrink by 11.1 per cent to £2.03bn. Global market share decreased by 0.7 percentage points to 13.4 per cent.

Mr Nicoli said: "We will not be chasing market share for the sake of it. We are totally focused on profit and artist development."

He said that with a new management in place, including Alain Levy, who joined as chief executive in October, and a £100m cost savings programme, there would be a turnaround this year.

Mr Levy said the problem last year was that the company was depending on a number of big releases, which did not perform as well as planned.

"That is not the situation this year," said Mr Levy. "We would like the big releases but they would be the icing on the cake. You cannot simply depend on them."

Most of the numbers in the results were already flagged by the company and EMI shares closed down 6.6 per cent to 271p.

Lorna Tilbian, an analyst at Numis, said: "The market has priced failure into the shares so that if Alain Levy delivers, the upside is substantial. They have kitchen-sinked the numbers, so this could be the low point."

EMI took exceptional charges of £242.4m, including £94m for staff redundancies and £39m to terminate the contract of singer Mariah Carey. That pushed the bottom-line loss to £152.8m, compared with a profit of £254.4m the previous year. EMI's Music Publishing rights division saw operating profit increase 3 per cent to £107.8m.