EMI warns on profits, music bosses go

EMI Group ousted its two top music executives and announced plans to cut costs, after poor Christmas sales prompted a profit warning which sent its shares down over 10 per cent.

EMI, which had been pinning its hopes on new releases such as the Beatles' Love album and Rudebox by Robbie Williams, said that annual revenues at its music business were likely to fall between six per cent and 10 per cent on a constant-currency basis.

Global music sales have been hit in recent years due to piracy and competition for consumer spending, despite the growing popularity of digital music.

The firm said Alain Levy, chairman and chief executive officer of EMI Music since October 2001, and David Munns, vice chairman of EMI Music, would leave with immediate effect.

Eric Nicoli, who has been executive chairman of EMI Group since July 1999, becomes group chief executive officer and will take direct responsibility for managing EMI Music.

"We have now had seven consecutive years of decline in the recorded music market," Mr Nicoli told a conference call, adding that his appointment was a permanent arrangement as the firm looks to strengthen its position in the digital music sales.

Shares in the world's third-biggest music group, which were boosted throughout 2006 by regular takeover speculation, fell over 10 per cent in early trading to 237-3/4 before it improved slightly to 245-1/4 at 1042 GMT.

"EMI Music's second-half performance to date, in terms of revenues and profits, has been below prior expectations," EMI said. The company also unveiled plans for £110 million of annual cost savings, including an unspecified number of job cuts.

"This has resulted from weak market conditions, particularly over the Christmas period, and lower-than-expected sales from EMI Music's portfolio of second-half releases to date," EMI said.