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Wednesday, 20 March, 2002, 08:12 GMT
EMI announces 1,800 job cuts
HMV store
EMI bought Mariah Carey out of her contract last year
Ailing UK music group EMI has said it plans to axe 1,800 jobs - about one fifth of its workforce - in an attempt to cut costs.

The job cuts form part of a wider restructuring exercise aimed at shoring up the heavily-indebted company's battered finances.

EMI said the revamp will cost a total of 110m ($154m) to push through, but should generate annual cost savings of 98.5m.

The overhaul includes a new agreement between EMI and its lending banks which will boost the company's total debt capital to 1.65bn over the next three years.

Investor payout halved

"We are firmly on target to improve EMI's performance, and we are optimistic about our ability to attack the broader challenges," said Alain Levy, Chairman of EMI Recorded Music.

Most of the job losses will take effect by the end of the month, the company said.

Kylie Minogue
Kylie Minogue is one of EMI's artists
It added that it plans to write down a further 92m this year to take account of loss making investments.

The new write-down comes on top of the 38m that the company spent extricating itself from its contract with pop star Mariah Carey late last year.

The singer had signed with EMI in March 2001 in what was rumoured to be one of the most expensive recording deals ever.

The company said it plans to shed more underperforming artists this year.

Investors in London reacted with cautious approval, sending EMI's shares 9p higher to 355.75p in mid-afternoon trade on Wednesday.

The higher share price came despite news that EMI plans to cut its dividend - an annual payment to shareholders - by half, to just 8p per share.

Music woes

EMI, hit by a decline in music sales during the global economic slowdown last year, made a 2m loss for the March to September period last year, down from a 59m profit twelve months earlier.

The sales downturn came amid mounting investor concern over the company's ability to service its debts.

There has been speculation that EMI, the world's third biggest music group, might be forced to sell off assets including its stake in the HMV record shop chain and its legendary Abbey Road recording studios.

Last year, EMI tried to merge first with Warner Music and then with German media giant Bertelsmann, but both proposed tie-ups fell through.

EMI is due to announce results for the full 2001/02 financial year on 21 May.

The company said on Wednesday that it is on track to make a pre-tax profit of 150m, in line with its previous forecasts.

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"Deciding who to back is a risky business"
See also:

20 Mar 02 | Music
EMI cuts: What next?
05 Feb 02 | Business
EMI shake-up amid falling sales
23 Jan 02 | Music
EMI drops Mariah Carey
19 Nov 01 | Business
EMI profits wiped out
15 Oct 01 | Business
EMI signs new music chief
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