LONDON (AFP) - EMI reported a fall in interim profits but said booming digital music sales and efforts to stamp out piracy had put the industry as a whole well along the road to recovery.
The British company said an 11.4 percent drop in half-year revenue reflected a release schedule skewed towards the second half as well as the strength of sterling.
But it added that a promising release schedule for the crucial Christmas period promised a "substantial" improvement in the full-year performance of the recorded music division.
EMI stormed 9.83 percent higher to 229 pence in London amid the relief the music group did not issue even worse results.
Pretax profits fell by 7.3 percent to 11.4 million pounds (16.3 million euros, 21.1 million dollars) in the six months to September from a year earlier.
Group revenue dropped to 851 million pounds from 960.3 million. Excluding the impact of currency fluctuations, revenue fell by 5.4 percent.
EMI, home to such artists as Robbie Williams, The Rolling Stones and Norah Jones, said the fall reflected a weighting of its recorded music release schedule to the second half of the financial year.
EMI chairman Eric Nicoli gave an upbeat assessment of future prospects, saying business was picking up going into the crucial Christmas period.
"Given the positive overall trend in the global music market over the past year and the expected high levels of release activity across the industry in the months ahead, we are confident that we will see a substantial and very welcome full-year improvement in the performance of the recorded music market," he said in a statement.
A decline of 1.3 percent in sales for the overall music industry in the first half of EMI`s financial year represented a significant improvement on the 9.6 percent slump seen a year earlier, Nicoli said.
EMI had an "especially strong" second-half release schedule and had already seen a significant year-on-year pick up in sales since the end of September.
"This, along with the strong growth of music DVDs and the explosive growth in our digital market activity, leaves us well placed to maintain our market share for the full year," he predicted.
Digital sales more than quadrupled at constant currency rates in the first half of the year, helped by the launch of Apple`s iTunes service in Europe, and now represent more than two percent of total revenue.
Alain Levy, head of EMI`s Recorded Music unit, agreed the industry could return to "modest" growth in the company`s next fiscal year.
"It looks like you`ll see either modest decline or modest growth (next year) and by modest I mean plus or minus two percent," said Levy during a conference call with reporters.
Turning to the prospects for further consolidation in the industry, Nicoli said EMI was unlikely to go on the acquisition trail in the near term having been thwarted its efforts to buy Warner Music last year.
"EMI is focused on building the business we have and becoming the best music company in the world. I see no reason why the structure of the industry should change," said Nicoli.
Like other major music labels, EMI is struggling to stem sliding sales, which it has blamed largely on music piracy and the downloading of songs for free via the Internet.
The group has cut over 3,000 jobs since March 2002 and dropped hundreds of artists from its roster as part of cost-cutting measures.
11/19/2004 - 17:03 GMT - AFP