EMI on Tuesday reported a swing to a fiscal full-year net profit despite a slump in sales, as the company’s cost-cutting plans came to fruition.

EMI's adjusted pre-tax profit rose to 177.3 million pounds ($290.2 million) in the year ending March 2003, from 153.3 million pounds.

The company said overall sales fell 11% to 2.175 billion pounds, dragged lower by a 12.6% fall in recorded music, below the 6% fall it had previously predicted. Chairman Eric Nicoli said the global recorded music market fell by almost 9% during the same period.

"This market movement was markedly worse than we, and others in the industry, anticipated at the start of the year," Nicoli said. "We delivered the promised substantial improvement in profitability driven by the turnaround of EMI Recorded Music, another solid performance from EMI Music Publishing and tighter financial management across the group."

Additionally, EMI Recorded Music operating profit was up 82% and margins more than doubled from 4.1% to 8.5%, as a result of cost savings, the effect of new management's swift exit of unprofitable operations and costly joint ventures and wiser marketing spend, the company said, adding that the company was profitable in North America for the first time in many years.

Nicoli also addressed rumors of a potential merger of his company with another music major. "We have demonstrated our ability to operate whatever the market conditions and whatever the competitive set," he said. "We think we will make progress with or without participation in industry consolidation. Beyond that I have no intention of fueling speculation."

EMI shed 1,900 jobs and axed 400 acts in its latest financial year. It said it had aggressively streamlined its artist roster to concentrate on "profitable, sustainable sales from artists with long-term potential." The music company said it had subsequently more than doubled its recorded music margins to 8.5% from 4.1%. But the cuts in artists and labels and a longer-than-expected restructuring shaved EMI's global market share to 12.8% from 13.4%. However, the company said it expected to increase that this year.

Alain Levy, Chairman/CEO of EMI Recorded Music, said he expects the global market for recorded music to fall between 5% and 8% in the year ending March 2004. He said that over the past year the market was hit by piracy, illegal downloading from the Internet and economic uncertainty in some parts of the world.

While EMI draws 80% of its revenues from the recorded music business, music publishing had been holding up better in the downturn. However, music publishing sales fell to 401 million pounds from 416 million due to currency movements.