Warner Music Group has posted a narrowed $32m net loss for the quarter ending June 30 - as weak performance in France and Japan is blamed for revenues dropping 4.9%.
The net loss figure compares favourably to the year before, representing a 30% reduction from Q3 2011’s $46m loss. However, the Q3 2012 loss figure included a tax benefit of $11 million, up from an expense of $15 million in the prior year.
Overall Q3 revenues declined by 4.9% year-on-year to $654m - although Warner said this was largely due to unfavourable exchange rates. It said revenues dropped 1.2% on a constant currency basis.
The firm said revenue growth in the U.S., Germany, Italy, Canada, Latin America and parts of Asia was more than offset by weakness in France and Japan.
WMG digital revenues climbed 13% to $230m, representing 35.2% of total revenue for the quarter, compared to 29.5% in the prior year.
Q3 operating income dropped by 30% from $10m to $7m, whilst operating income before depreciation and amortization (OIBDA) fell 14% year-on-year to $66m.
As of June 30, 2012, the company reported a cash balance of $219 million, total long- term debt of $2.209 billion and net debt (total long-term debt minus cash) of $1.990 billion.
Recorded Music revenue declined 5.3% to $518m (or 1.9% on a constant currency basis) whilst digital recorded music revenues grew 13% to $215m.
Digital recorded music represented 41.5% of total Recorded Music revenue, compared to 34.9% in the prior-year quarter.
Music Publishing revenue declined 4.1% to $140m (0.7% on a constant currency basis). Digital publishing revenues grew 6.7% to $16m, as synchronization revenue grew 3.3% and performance revenue declined 8.5%.
There were several bright spots in our results for the quarter,” said Stephen Cooper, Warner Music Group’s CEO. “In our Music Publishing business, we grew OIBDA, OIBDA margin and constant-currency revenue. In our Recorded Music business, strong growth in digital revenue more than offset the decline in physical revenue on a constant-currency basis, showing the promise of the industry’s transformation. We look forward to the fourth quarter and the next fiscal year, as we work to accelerate our progress.” ?
"Our Unlevered After-Tax Cash Flow was strong," said Warner Music Group Executive Vice President and CFO Brian Roberts, adding, "The decline in total cash balance was expected, due to our semi-annual cash interest payment this quarter."