Company reports $348 mil profit
LONDON — Investors displayed renewed confidence in EMI Group on Wednesday after the music giant announced better-than-expected earnings for its most recent financial year.Earlier this year, the company issued two profits warnings, but Wednesday it told the stock market it will report earnings before interest, tax, depreciation and amortization (Ebitda) of about £174 million ($348 million) — ahead of market estimates. Full results for the group’s financial year, which ended March 31, will be announced May 23, but the company said its program of cost-cutting is ahead of schedule and that it should see savings of $140 million in the current year. By 10 a.m., EMI’s share price was up more than 5% to $4.53, despite disclosing that its board of directors has “decided to suspend dividend payments until the benefits of the restructuring process have been fully realized.” That process should be complete by 2009. In the trading statement, EMI also said revenues at its record company division decreased by about 15% in the past year, although digital revenue was up by about 59%, representing some 10% of overall revs. EMI Music Publishing revenues remained flat, with digital revenue increasing by 28%, representing about 8% of total sales. The strength of the publishing side of the biz has prompted the EMI board to examine a debt restructuring package by borrowing against the value of its songs catalog. That securitization should take place before the end of this year.