1,800 jobs axed in EMI revamp
EMI, the music group behind Robbie Williams and Kylie Minogue, is slashing 1,800 jobs and halving its dividend. The group is also to take one-off charges of £240m this year - easily wiping out its expected profits.
The axe is falling on the troubled recorded music division, where roughly one in six staff will be made redundant. Most will go by the end of this month, with the rest out by September.
EMI, the world's third-biggest music company, said the revamp would save it £98.5m a year from 2004 and raise profit margins in the recorded music division to 11-13% within three years.
Chairman Eric Nicoli said the plans would put EMI 'back on a growth track'. He added: 'The restructuring plans will transform the performance of this part of our business'.
But the cuts would cost EMI £110m. The group is also to take a further charge of £130m for write-offs, including the cost of dumping fallen US diva Mariah Carey.
The dividend would be 'rebased' to 8p a share, EMI said, from 16p last year. The dividend has been unchanged for the past four years. 'Looking forward, the board will consider the level of dividend in the light of progress within the business,' it added.
EMI said it was on track to make profits of £150m for the year ending March, before the one-offs costs and tax. Profits were £260m last year. It has also agreed new bank facilities.
The stock initially jumped 4% but quickly surrendered those gains, trading down 1p at 345p after an hour. It was worth 505p last summer.
The world's top five music giants have been under pressure to slash costs and restructure after one of the industry's worst years on record when an economic downturn compounded the effects of waning CD sales and rampant piracy.
The revamp was masterminded by Alain Levy, who took over as head of the recorded music unit in October. 'We are shaping EMI Recorded Music for the future, and positioning it for revenue growth from a much lower cost base and with much better practices,' he said.
'There are some real challenges facing the music industry at the moment. However, we are firmly on target to improve EMI's performance, and we are optimistic about our ability to attack the broader challenges.'
The company, which employs around 10,000 staff in the division, has not given details about where the jobs will go, but a spokesman said the redundancies would be across its operations in 50 countries.
