Universal Music UK weighs up Brexit impact as major maintains revenue growth

Universal Music UK weighs up Brexit impact as major maintains revenue growth

Universal Music UK has reported a year-on-year revenue increase of 12.7% in 2018.

The UK arm of the major’s turnover totalled £388.24 million. That was split between product sales (£210.98m) and royalties (£177.26m).

The rate of growth at the company headed by CEO/chairman David Joseph was just ahead of the 10% recorded by Universal Music Group in 2018.

The bulk of its turnover was from UK sales (69.1%), with Europe accounting for 11.5% and the US 12.7%.

In its strategic report, Universal Music UK’s directors said: “This growth was driven by increased demand for streaming services, as well as the timing of new releases. The directors consider that the outlook for future years is positive as the expectation is for continued growth in demand for streaming services.” 

Universal’s Virgin EMI is currently enjoying major sales success with 2019 breakthrough artist Lewis Capaldi, who’s scored the fastest-selling album of the year so far. 

Profit margin at Universal Music UK increased from 31% to 32%, as a result of the major’s product mix and cost controls.

The overall loss at the UK major narrowed to £6.49m in 2018, compared with £16.1m in the prior year. Its operating profit was £21.34m.

Universal Music UK identified a number of potential challenges, including price pressure from supermarkets and uncertainty about growth in streaming subscription services in the long term.

The company also confirmed it is assessing the possible impact of Brexit, which is currently set to take place on October 31. Universal is looking closely at logistical challenges of potential delays at UK ports, new VAT and customs rules that may apply to trade with the EU, and changes in freight and duty charges for moving goods to and from the EU 

Universal’s directors added that Brexit is not considered a significant risk to operations.

The latest results also confirmed that Universal paid out £250,000 for its controlling stake in All Around The World, whose recent signings include Tulisa.

Universal’s parent company Vivendi is currently working to secure a strategic partner for up to 50% of UMG.

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