Music giant EMI charts losses

EMI hopes to find more stars like Kylie Minogue to return to profitability

LONDON, England (CNN) -- Britain's EMI Group, which axed hundreds of stars and a fifth of its staff, swung into the red as global sales fell.

The world's third largest music group made a net loss of £199.5 million ($290 million) in the year ending March 31, 2002, compared with net income of £168.1 million a year ago. Sales tumbled to £2.446 billion from a previous £2.673 billion.

EMI -- the home of Radiohead, Robbie Williams and Kylie Minogue -- also said on Tuesday pretax profit before items fell to £153.3 million from £259.5 million.

It had warned previously that pretax profit would decline to £150 million as global industry sales slid 5 percent last year, along with an increase in piracy, Internet song swapping sites and a fall in compact disc replacement sales.

CNN NewsPass VIDEO EMI has had a shaky year, hit by falling CD sales and Internet piracy. Charles Hodson reports. Play video

The company, which brought in Alain Levy to turn around its recorded music business, announced in March plans to slash 1,800 jobs and removed high profile artists, like Maria Carey, from its roster to return to profitability.

London-based EMI hopes the moves will make it leaner and enable it to find and promote new talent.

"There is only so many times you can rehash the Beatles. They need to find new artists," Henk Potts, of Barclays Private Clients, told CNN. He noted that the company expects global sales to rise or fall by 2.5 percent this year, while many analysts are forecasting a 3 percent drop.

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EMI's expects recorded music sales to be "flat" this year, after its market share slipped 0.7 percentage points to 13.4 percent, while its closely watched U.S. share dipped to 10.4 percent from 10.8 percent.

"EMI is incapable of crashing the U.S. market," Potts said. "Our American cousins don't appreciate our dulcet tones of 'I should be so Lucky' (an old Kylie Minogue hit)."

EMI said it was just starting talks to re-sign top British performer Robbie Williams, whose contract expired in February, and said it was on track to reach a recorded music operating margin of 11-13 percent within three years, compared to less than five percent last year.

EMI's stock, which has fallen more than 12 percent this year, slid 7.2 percent to 270 percent on Tuesday in London.