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Warner posts surprise USD18m loss
Warner Music has posted a surprise USD18m Q4 loss thanks to slumping record sales and costs relating to job cuts. The disappointing results, equivalent to a loss of USD0.12 per share, come in spite of a 1% year-on-year rise in revenues and an increase in digital revenues.
Warner's revenues for the quarter ending September 30 came in at USD861m, beating Thomson Reuters estimates of USD820m. However, the company's overall earnings, hurt by costs of USD0.09 per share in severance charges, swung to a loss. This compares with profits of USD6m for the same quarter last year - USD0.04 a share. It fell short of expectations, with analysts predicting profits of USD0.05 per share.
"Looking ahead to fiscal year 2010, the volatile global economy and ongoing recorded music industry transition are likely to continue to affect our results," warns Warner Music's EVP and CFO, Steve Macri. However, Warner Music CEO, Edgar Bronfman Jr, says that in spite of "difficult economic and industry trends", the label managed to increase its US market share to 21%.
At Warner's recorded music division, a 14.6% drop in US revenues was offset by a 16% increase in international revenue. Overall, music revenue increased by a slight 0.3% year-on-year. Warner attributes this to a "strong release schedule", its strength in Western Europe and Japan and global digital revenues. However, operating income at the division fell 10.7% to USD50m.
Digital revenue at Warner's recorded music division grew 9.6% year-on-year during the quarter. Bringing in USD171m, digital sales now account for 24.1% of Warner's overall music sales. This proportion was even higher in the US, where digital sales accounted for 33.8% of overall music revenue.
Music publishing revenue was up 3.8% year-on-year, while operating income increased 16.7% to USD42m. For the full year, Warner made a loss of USD100m (USD0.67 per share), while revenue declined 9% to USD3.2bn. The company's net debt as of 30 September stood at USD1.56bn, an improvement on the same time last year.
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