UMG slumps in Amsterdam; second quarter disappoints on margins and subscriptions
The music major has dragged its largest shareholder, Vivendi, down with it, with Vivendi recording its worst daily fall since August 2002
(Il Sole 24 Ore Radiocor) – A black Friday for Universal Music Group, whose shares plummeted on the Amsterdam Stock Exchange following the publication of its first-half results. According to market analysts, it was the second-quarter figures for EBITDA and margins, as well as subscription revenues – which were well below expectations – that caused particular concern. The major record label’s share price fell by as much as 22 per cent to €15.07, dragging its main shareholder, Vivendi, into the turmoil; on the Paris Stock Exchange, Vivendi’s shares fell by 17 per cent to €1.64, marking its worst daily fall since August 2002.
UMG’s net profit attributable to shareholders for the six months to 30 June fell to €222 million from €1.43 billion last year. Earnings per share fell from €0.77 to €0.12. By contrast, the music giant’s turnover rose to €6.19 billion from €5.88 billion in the previous year, representing growth of 10.8 per cent at constant exchange rates, benefiting from the consolidation of Downtown Music Holding. The board of directors has approved an unchanged interim dividend of €0.24 per share for the period, payable on 27 October.
More specifically, the record label representing Lady Gaga and Taylor Swift reported an adjusted EBITDA in the second quarter – Universal’s preferred profitability metric – of 674 million, down from 676 million the previous year, with an adjusted margin of 20.5 per cent, down by 2.2 percentage points. Analysts had forecast adjusted EBITDA of 707.9 million. Revenue rose by 10.5 per cent in nominal terms and by 13.3 per cent at constant exchange rates to 3.29 billion euros. Analysts had forecast revenue of 3.27 billion. Revenue from subscriptions and streaming grew by 15.4% at constant exchange rates, reaching €1.76 billion, slightly below analysts’ forecast of 15.5% growth.
Subscription revenue rose by 16.6 per cent at constant exchange rates to 1.36 billion, whilst streaming revenue increased by 11.5 per cent to 389 million. Analysts had forecast growth of 17.9 per cent for subscriptions and 9.2 per cent for streaming, Excluding the consolidation of Downtown, the increase stands at 5.6 per cent, with subscriptions up 6.7 per cent (compared with the 9.4 per cent forecast by analysts) and streaming up 1.7 per cent. Subscriptions and streaming have slowed in recent years following the surge seen during the pandemic, but remain a key focus for investors as an integral part of the group’s recorded music business, which accounts for the majority of its revenue.
Revenue from physical sales, which includes vinyl sales, rose by 15.9 per cent at constant exchange rates to €342 million, thanks to . The company highlighted that the best-selling artists of the quarter included Noah Kahan, BTS, Olivia Rodrigo, Drake and Olivia Dean.
