MUMBAI: Warner Music Group Corp. has posted unexpected losses in its fouth quarter amid a revenue slump in U.S music sales and higher costs.
The shares of the music label giant on tuesday, slumped $1.11, or 16 percent, to $5.95 in afternoon trading after falling as low as $4.44 earlier that day.
Chief Financial Officer Steve Macri added that although the company is seeing growing market share, “the volatile global economy and ongoing recorded music industry transition are likely to continue to affect our results” in its new fiscal year.
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The record label has worked to increase its presence in digital music as the popularity of CDs continues to decline. In August, Warner reached a licensing deal with Google Inc.’s YouTube, ending a long-running dispute and putting its music videos back on the popular video-sharing site.
Warner, along with the other three major record labels, recently licensed its catalog of recordings to be able to be played or bought directly from Google’s main search-results page.
For the quarter ended Sept. 30, Warner Music reported a loss of $18 million, or 12 cents a share, from a year-earlier profit of $6 million, or four cents. The current year’s quarter included nine cents in severance charges. Revenue rose 0.8% to $861 million, or 5% on a constant-currency basis.
For the year, it reported a loss of $100 million, or 67 cents per share, compared with a loss of $56 million, or 38 cents. Revenue fell 9 percent to $3.18 billion.
In the quarter, U.S. sales fell by 7.4 percent while international sales rose by 8.8 percent, or 17.8 percent excluding the impact of foreign currency fluctuations.
Digital revenue was up 10 percent to $184 million, or 11.5 percent on a constant-currency basis. Digital sales made up 21.4 percent of total revenue in the quarter, up from 19.6 percent a year earlier.
Chief Executive Edgar Bronfman Jr. told analysts the company increased its U.S. market share over the year by a quarter of a percentage point to 21 percent, “despite a surge in sales of Michael Jackson’s recordings,” which are distributed by Sony Music Entertainment.
The company said the current fiscal year was led off by promising releases, including the soundtrack to “The Twilight Saga: New Moon,” but that the music industry faces more challenges ahead.
