Accounting fraud in its Brazilian affiliate contributed to EMI Group reporting lower profits and revenues Wednesday in its interim financials for the six months ended Sept. 30.
The company reported revenue of £867.9 million ($1.64 billion) for the half year, down 4.1% from $1.75 billion in the same period in 2005.
A decline in first-half revenues at the company’s record labels, plus the $17 million impact of the Brazilian label’s accounting fraud, led to reduced group profit from operations of $118.8 million compared with $164.2 million 12 months earlier.
Profit before tax was $32.2 million, compared with $77.7 million a year ago.
In the area of digitally delivered music, EMI’s revenues rocketed 68.4% to $139.6 million during the first half of this financial year, representing 8.5% of total group revenues. Six months previously, digital sales accounted for 5.4 % of total revenues.
In a statement, EMI Group chairman Eric Nicoli said the company expects improved sales during the second half of 2006 and in early 2007, when most of its big-name album releases are scheduled — Robbie Williams, Norah Jones, Keith Urban, Joss Stone, Dierks Bentley, RBD, Relient K, All Saints, Vasco Rossi, Simon Webbe, Depeche Mode, the Magic Numbers, the Thrills and Moby, as well as “Love,” a new release of Beatles tracks from the Cirque du Soleil show of the same name.
“Digital revenue continues to grow rapidly,” Nicoli said. “We expect continued strong growth in this revenue stream in the second half driven by EMI Music’s release schedule, the expected launch of new portable music players and the seasonal pickup in digital revenue that has been seen in the past two years.”
Nicoli also highlighted the company’s A&R successes, citing breakthrough artists such as Letoya, Cherish and 30 Seconds to Mars in the U.S.; in the U.K. he heralded KT Tunstall, Corinne Bailey Rae, the Kooks and Lily Allen.