Columbia Music Entertainment Issues Notice of Consolidated Business Results for First Half of Fiscal Year Ending March 2008
November, 16 2007
Tokyo - Columbia Music Entertainment Inc. (hereinafter CME; Head Office: Minato-ku, Tokyo; Chief Executive Officer (CEO): Sadahiko Hirose, Chairman: Strauss Zelnick) today issued its consolidated business results indicating the Company’s overall performance for the first half (April 1 ~ September 30, 2007) of the fiscal year ending March 31, 2008.
During the first half of the current fiscal year, although consolidated sales for the fiscal half year under review fell below the initially planned figure, the Company was nevertheless able to surpass its initially planned figures for operating profit, ordinary profit, and overall net profit for the period.
The Company’s consolidated sales totaled 8,723 million yen (a decline of 27.6% compared with the same period of the previous fiscal year). This result was due mainly to a reduction of 2,311 million yen based upon a change in the accounting procedure for sales in the P&D business from a total sales method to a handling fee method, and also due to the paring down of releases of less profitable works.
Moving on to the profit and loss situation: Although younger audiences are buying fewer CDs , audio software purchases by older consumers are flourishing. As a result of strong sales of catalogue titles that yield high profit margins, the Company’s gross profit margin was at about the same level as in the same period of the previous fiscal year at 43.8%. In addition, the Company’s sales expenses and general administrative expenses declined compared with the same period of the previous fiscal year, while our custom sales, mail order, digital, and overseas music production subsidiaries all posted profits exceeding those of the same period of the previous fiscal year.
However, because of the overall decline in sales, the operating loss for the fiscal half-year under review was 267 million yen (compared with a loss of 177 million yen for the same period of the previous fiscal year) while the ordinary loss was 323 million yen (compared with a loss of 321 million yen for the same period of the previous fiscal year). Accordingly, the overall net loss for the fiscal half-year under review was 311 million yen (compared with an overall half-year loss of 314 million yen for the same period of the previous fiscal year).
Full Year Business Result Forecast for Fiscal Year Ending March 2008
At the present time, the Columbia Group’s revised consolidated business result forecast for the full year ending March 2008 (April 1, 2007 ~ March 31, 2008) (including for TDK Core) anticipates sales of 21.5 billion yen (up by 1.5 billion yen or 7.5% compared with the initial business performance plan), operating profit of 600 million yen (up 100 million yen or 20%), ordinary profit of 550 million yen (up 100 million yen or 22.2%), and net income for the term of 400 million yen (no change). We are expecting the above-mentioned increases in income and profit for the entire Columbia Group) as a result of CME’s acquisition of a 100% shareholding in TDK Core with effect from November 1, 2007.
Concerning the outlook for the Columbia Group’s consolidated business performance for the second half of the current fiscal year, we have scheduled the release of several major works, and so apart from results related to TDK Core, there is no change from the initial performance plan.
The business forecast for TDK Core anticipates sales 1.5 billion yen, and operating profit of 50 million yen.
In accordance with the implementation of the Second Career Program (announced on October 3), the Company’s operating profit for the current period will increase by 50 million yen. We are planning to record a one-time extraordinary loss of 100 million yen reflecting special retirement allowances in line with this program. Meanwhile, by carrying out this program, we expect to be able to achieve an effective reduction in personnel expenses of approximately 140 million yen annually from the next fiscal year.
In the second half of the year as well, we will proceed to make effective use of our rich music catalogue. In addition to realizing the synergy effects from the acquisition of TDK Core at the earliest possible date, we will proceed with our active efforts to pursue new business ventures, including by expanding our investment for obtaining new content, developing new methods of discovering talented new artists, and considering potential acquisitions.
CME will strive to make its management even more efficient and to improve its profitability by further bolstering the music production business and promoting the expansion of its operations through additional M&A activities.
Artists and Titles Making Major Contributions to Sales
• Enka/Kayokyoku Dept.
Kiyoshi no Soran Bushi/Kibo to Iu Na no Saishu Ressha
Enka Meikyoku Collection 7 ~ Abayo—Kiyoshi no Soran Bushi
Okaerinasai/Aono Koro e
Koi-zakura/Hora, Hitori Janai Yo
Onna Hamauta/Tsugaru Onago Bushi
• J-Pop/J-Rock Dept.
Tsunaide Te/Domino/Sasayaki Namiki
Sadistic Mika Band—
LIVE in Tokyo (produced by Kazuhiko Kato)
Dare no Tame demo naku…Kimi ni/Flow, ORANGE
Samantha/Honey B~Mitsubachi Dance
• International Dept.
Simian Mobile Disco—
Attack Decay Sustain Release
The Pigeon Detectives—
Wait for Me
• Educational Dept.
Fuuka, Wanwan, Uutan—
Inai Inai Baa! Series
2007 Pop Hit March
2007 Anime & Kid’s Hit March
• Animation Dept.
THE IDOLM@STER MASTER ARTIST Series
Takayoshi Tanimoto/Ichiro Mizuki—
Theme song from Juuken Sentai Gekiranger
• Hogaku Dept.
Furusato no Minyo
Shinosuke Rakugo BOX (Part 1)
• Classic Dept.
I&I, Yano Saori Best ~ Jazz Kaiki ~
Classic Best ~ Ten ni Hibiku Uta ~
• Catalogue Products
Misora Hibari Special Best
Duet Dai Hit Dai Zenshu
Showa no Dai Hit Dai Zenshu