PolyGram makes it an eighth year of growth

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The Independent Online

PolyGram, the international entertainment company, overcame a slow second half to achieve its eighth consecutive year of sales and profits growth in 1995.

The company, which warned of flat earnings for the year shortly before Christmas, saw sales in the year to 31 December rise 9.2 per cent in local currency terms to 8.8bn guilders and profits rise 3.6 per cent to 741m guilders. The previous four years had seen average profits growth of 20 per cent, a performance repeated in the first half of 1995, when net income rose 20 per cent to 270m guilders on total sales of 4bn guilders.

It blamed the difficulties in the usually stronger second six months on a weaker-than-normal performance by the pop division, the late delivery of several important albums, the absence of a success to match the hit film Four Weddings and a Funeral and the strong appreciation of its reporting currency, the Dutch guilder. The company argues that local currency growth is the true measure of its performance since less than 5 per cent of its revenues come from the Netherlands.

Meanwhile, Alain Levy, president and chief executive of the company that is building a films division alongside its music business, said he would consider the acquisition of any available film studios, including MGM. But he said the price would have to be right - a reference to PolyGram's failure to acquire the Samuel Goldwyn library after being outbid late last year by John Kluge's Metromedia International Group.

The films division, which now accounts for 14 per cent of sales, was developing well, with costs under control. Although there was no hit like the previous year's Four Weddings, it had enjoyed success with Nell, French Kiss, The Usual Suspects and Shallow Grave. It also received seven Oscar nominations earlier this week, including four for Dead Man Walking, the Sean Penn and Susan Sarandon film that opens in the UK shortly.

Although pop slipped in the second period, it still contributed 65.8 per cent of the total sales for 1995, with 31 albums selling more than 1 million copies, compared with 29 in 1994. PolyGram would not be drawn on which artists had delivered records late, but pointed out that this year's schedule would include releases from such well-known acts as Sting, U2 and Lionel Ritchie. Last year's biggest sellers were The Cranberries, Bon Jovi and Janet Jackson.

The jazz division had another good year, but the three classical labels, which account for 10 per cent of sales and include the renowned Deutsche Grammophon, were held back by a lack of crossover hits and soft-catalogue sales.

Mr Levy said: "Our 1995 results must be seen in the context of currency effects and our overall track record of growth.

"We have made good progress in many markets and our proposal to increase our dividend by 12 per cent reflects our confidence in the future," he said.