Shares in EMI Group Plc, the world's third-largest record company, slumped as much as 18 percent after the company cut its fiscal-year earnings forecast.
EMI, where revenue has dropped for three straight years, is counting on new albums to lift earnings. Planned releases from bands Coldplay and Gorillaz will slip into next fiscal year, the company said today, meaning an April release at the very earliest. Recorded music revenue accounts for about 80 percent of EMI's total.
Pretax profit before amortization and one-time costs for the year to March will be about 138 million pounds ($258 million), EMI said in a statement today. Analysts expected 168 million pounds. Recorded music sales will fall between 8 and 9 percent after demand missed estimates and albums were delayed, EMI said.
Shares in EMI had their steepest decline in more than three years, falling as much as 50.5 pence to 230.75 pence. The stock traded at 238.5 pence at 8:40 a.m. in London. "While this rescheduling and recent softness is disappointing, it does not change my views of the improving health of the global recorded music industry,'' Alain Levy, head of the recorded music division, said in the statement.
EMI said it now expects to lose market share in the fiscal year. As recently as November, the company has said it planned to at least maintain its share of a market expected to contract as much as 4 percent. That would be the fifth straight annual drop.
The recorded music division will maintain last fiscal year's profitability by cutting costs, EMI said. The cost-cutting program, announced last March, has including paring 1,500 jobs and firing about 20 percent of the artists on its roster.
EMI generates the remainder of its revenue from its music publishing business. Earnings at that unit are matching the company's forecast, EMI said.
EMI's forecast for recorded music sales this fiscal year excludes the effect of currencies and compares with the year- earlier period.
Source: Bloomberg
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