Music Giant EMI Reports Loss of $290 Million for Year, Cuts Dividend

Music company EMI Group said it lost about $290 million in the year ended in March, largely because of disappointing results in its core music division, and cut its dividend in half. The announcement caused the music giant’s shares to drop 7% in London trading.

EMI, which is home to acts such as Kylie Minogue and Radiohead, reported a net loss of $289.3 million for its fiscal year ended March 31, in contrast to a profit of $115.5 million a year earlier.

The loss reflected restructuring costs of about $145 million and almost $58 million arising from the release of singer Mariah Carey from her contract this year.

Its revenue fell 8% to $3.5 billion from the previous year.

EMI posted a sharp but expected 40% fall in adjusted pretax profit and said its radical overhaul was going according to plan despite an industry ravaged by an economic slowdown and piracy.

EMI “faces so much of a struggle with piracy and they need to find a way to protect themselves. Sales are falling and there are a number of factors to take into consideration, such as the [retailer] HMV float not going well,” said Martin Dobson, head dealer at NatWest Securities in London.

In a drive to clear the decks and improve its chances of discovering top acts, EMI unveiled an extensive overhaul in March, cutting 1,800 jobs and scrapping 400 artists from its roster. EMI said at the time it had not paid enough attention to what the business was really about--generating big-name stars.

Though a turnaround is expected to take some time, EMI said it expected two or three of its albums to sell more than 5 million copies each this year, although sales will remain flat.

EMI Chairman Eric Nicoli said a strategic review that began six months ago was on track and would address the problems.

“The recovery is well underway, and this is already a fundamentally different company to the one that reported results last year,” he said.