EMI Triples Earnings

Shedding a couple of thousand staff and a general tightening of the corporate belt is showing some signs of working at EMI, where full-year earnings tripled to £163 million ($245 million).

Although sales rose 4 percent and edged over the £1 billion ($ 1.50 billion) mark, it may still be too early for the only major British record label to hang out the bunting.

Apart from the cost savings, EMI also benefited from currency gains. Excluding the currency impact – about a quarter of the £112 million ($168.3 million) gain was thanks to the strengthening of the dollar against the pound – sales actually fell 10 percent. The company’s global market share was flat at a little less than 9.5 percent.

EMI chief exec Elio Leoni-Sceti said the results, which are the first full year figures since Guy Hands’s Terra Firma bought the company, show EMI has held up during a year in which the market declined about 9 percent.

Even before U.K. the business pages had a chance to react to the figures, their analyses will likely include a reminder that EMI is still about £2.7 billion in debt.

Leoni-Sceti has pointed out that the company passed its covenant test in March, which Citigroup required if it was to continue to fund the venture, but it managed to do that only after Terra Firma and other investors shoveled in another £84 million – an “equity cure” – to make sure it did.

The company’s also on track to deliver £200 million of cost savings per year, although so far it hasn’t detailed how much it’s had to shell out on laying off workers and restructuring. These costs will come off the £58 million free cashflow generated after interest and tax.

Non-physical sales, including digital and licensing rights, represented more than 35 percent of income.

EMI’s best returns came from Coldplay’s Viva La Vida, which was last year’s bestselling album. The next big-hitter lined up for this year is Depeche Mode.

In the U.S., Warner Music reported a pre-tax loss of $58 million (£39 million) in the three months to March and underlying earnings down 17 percent at $80 million (£53.13 million).