HOLLYWOOD — EMI chairman Eric Nicoli on Tuesday reassured nervous investors that the clouds are lifting in the recorded music industry this year, while promising that the U.K.-based music major would hit its fiscal 2004 financial goals.
Speaking at the company’s annual shareholders meeting, Nicoli said the second half of the year should account “for a higher proportion of sales and profits than it has in prior years. Our release schedule for the remainder of the year is strong, particularly in the second half.”
While the company did not provide any financial benchmarks, it noted that on a global basis the recorded music market has shown “encouraging trends in the first few months of our financial year,” with the U.S. market in particular enjoying 10 consecutive months of growth. While conceding that continental Europe remains “difficult,” he said Japan and U.K. markets have also seen “positive trends.”
EMI, which could soon lose its global No. 2 position behind Universal Music to soon-to-merge Sony-BMG, has struggled to streamline its operations and boost its North American market share in the past year to improve profitability in a sluggish and evolving music market.
At a recent investors conference, EMI predicted that digital distribution of songs could account for as much as 25% of its total recorded music sales in five years.
EMI shares rose nearly 2% in London Trading to close at £230.75.
“In our recorded music division, EMI Music, the implementation of both the outsourcing of manufacturing in continental Europe and the U.S. and the restructuring of selected labels is on schedule.”
Jones, Urban sales strong
EMI’s strongest domestic performers have been albums from Norah Jones (3.2 million sold), Keith Urban (1.6 million), the Beach Boys (1 million), Yellowcard (800,000 sold) and the Beastie Boys (660,000 sold) along with steady sales from Chingy, Coldplay, “The Essential Dean Martin” and Joss Stone’s “Soul Sessions.” Janet Jackson’s “Damita Jo” (900,000) and Lenny Kravitz’s latest have been disappointments.
Upcoming second-half releases include albums from Chemical Brothers, Coldplay, Gorillaz, the Thrills, Keith Urban and Robbie Williams.
Company also noted that it has finalized new synchronization licenses with major advertisers such as American Express, Target and Jaguar.
“As we highlighted in May, given the phasing of both our recorded music release schedule and the savings from our restructuring program, we expect the second half to account for a higher proportion of sales and profits than it has in prior years. With this strong release schedule and the progress we are making in both of our businesses, we remain confident that we will achieve our financial targets for the full year.”
For its fiscal year ended March 31, 2004, EMI reported total sales down 1.4% on a constant currency basis to £2.12 billion. Company emphasized, however, that its restructuring efforts have given it some of the highest operating margins in the business at 14%, compared with an estimated 11% at Sony Music and 9% at UMG.