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4
Section 4 - Business segment performance analysis
Financial Report
| Statutory Auditors’ Report on the Consolidated Financial Statements | Consolidated
Financial Statements | Statutory Auditors’ Report on the Financial Statements | Statutory Financial Statements
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Revenues and EBITA
Universal Music Group’s (UMG) revenues were €4,557 million, down
5.6% at constant currency (-6.7% at actual currency) compared to 2013.
Excluding the impact of Parlophone Label Group (divested in 2013 as
part of the EMI Recorded Music acquisition remedies) and at constant
currency, UMG’s revenues were down 3.8% compared to 2013 due to the
rapid transformation of the recorded music industry.
Recorded music digital sales were flat compared to 2013 at constant
currency and perimeter, as significant growth in subscription and
streaming revenues offset the decline in digital download sales.
However, total recorded music revenues declined due to the continued
industry decline in physical sales.
In the United States, UMG had the top three albums of the year: Disney’s
Frozen
soundtrack, Taylor Swift’s
1989
and Sam Smith’s
In The Lonely
Hour
. Including track and stream equivalent albums, UMG had the top
six, adding Ariana Grande
My Everything
, Katy Perry
Prism
and Lorde
Pure Heroine
. In France, UMG had the top three albums of the year from
Stromae, Indila and Kendji Girac. Globally, recorded music best sellers for
2014 included sales from the Disney
Frozen
soundtrack, the new release
from Taylor Swift, the breakthrough releases from Sam Smith, Ariana
Grande and 5 Seconds Of Summer and carryover sales from Katy Perry
and Lorde.
Reflecting this success, UMG won 33 awards and swept all four major
categories at the 57th Annual Grammy Awards in February 2015. Sam
Smith received three of the four major awards for Record of the Year, Song
of the Year and Best New Artist and Beck won for Album of the Year.
UMG’s EBITA was €565 million, up 11.3% at constant currency (+10.7%
at actual currency) compared to 2013 and up 20.2% excluding last
year’s contribution from divested Parlophone Label Group. The favorable
performance reflected the benefit of cost management and lower
restructuring and integration costs that more than offset the decline
in revenues.
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Cash flow from operations (CFFO)
UMG’s cash flow from operations amounted to €425 million (compared to
€585 million in 2013). In 2013, cash flow from operations benefited from
exceptional proceeds in relation to an insurance settlement, property
disposals and dividends (€54 million) from its interest in Beats, divested
in August 2014. UMG’s cash flow from operations was also impacted
by the unfavorable changes in working capital related to the phasing of
digital income receipts and royalty payments.
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Annual Report 2014