EMI Group announces a revision to its expectations for the performance of its recorded music division for the financial year ending 31 March 2007. It now expects the division’s revenue for the period to decline by around 15% at constant currency compared to the prior year, based on its current assumptions for the music market.
This revision to expectations is as a result of the continued and accelerating deterioration in market conditions in North America where, in the calendar year to date, the physical music market as measured by Soundscan has declined by 20%. This unprecedented level of market decline has led to an exceptionally high level of product returns. Consequently, the net sell-through on EMI Music’s current releases and catalogue has been lower than anticipated and, given the level of returns, the negative impact on gross margin has been higher than normal. As a result of these factors, EMI now believes that profits for the year ending 31 March 2007 will be significantly below current market expectations.
EMI Music Publishing continues to perform in-line with expectations.
This current challenging market environment reinforces EMI’s decision to re-focus and restructure the business for the future. To date, good progress is being made with the restructuring initiatives announced on 12 January 2007, and the Group is on track to deliver £110m of cost savings in full and on time.
EMI Group will provide a trading update on 18 April 2007 and will report its results for the financial year ended 31 March 2007 on 23 May 2007 .