EMI TO MISS SALES FORECAST

The music group said that recorded music sales over the full year would fall below last year's levels, according to the Financial Times of London.

According to the report, EMI had previously said that they would grow between 0% and 3% on a year-on-year basis. Investors and analysts were not heartened by the results: in morning trading, EMI stock was down 9.25p, or 5.56% at 174p, but recovered to 177p by midday.

Pre-tax profits rebounded to 42.2 million ($67 million) for the six months to the end of September, compared with a loss of 2 million over the same period last year, boosted by cost cuts in its recorded music division that saw 1,800 jobs being slashed and 400 acts being dropped earlier this year.

However, the group's overall sales slid 10% to 961.5 million, with sales of recorded music falling 12.4% to 759.3 million.

EMI chairman Eric Nicoli said, "The market weakness will now result in full-year sales in recorded music below last year's level. Nonetheless, we expect that significant and accelerating margin improvement in that business, coupled with strength in music publishing, will enable us to to deliver a substantial full-year improvement at all levels of profitability for the group."

"Credit is due to the management for mitigating the impact of the global decline in recorded music sales by restructuring, but the problem is that cost-cutting opportunities will run out by the end of the year," Nick Bertolotti, media analyst at JP Morgan, told the Financial Times. "It will then get very difficult to protect margins and offset the industry's ongoing decline in sales."

The group also announced that it plans to sell its 14.5% stake in HMV to institutional investors.

Proceeds from the sale will be used to fund its planned acquisition of the 50% stake it does not already own in the Jobete music publishing catalog.

For the half year, the company will pay a dividend of 2p a share, and expects the full-year pay out to be 8p, unchanged from last year.