POLYGRAM SALES UP 20 PERCENT, PROFITS UP 25 PERCENT, IN 1991
LONDON, March 5 /PRNewswire/ -- Global record and entertainment group, PolyGram (NYSE: PLG), today reported 1991 net sales growth of 20 percent and an increase in profits of 25 percent despite economic recession in several of its major markets. The profit figures include a turnaround in the company's performance in North America where 1991 income from operations totalled 13 million Netherlands guilders (NLG) compared with a loss of 48 million NLG in the preceding year.
For the year ended Dec. 31, 1991, PolyGram's net sales rose by 20.5 percent to 6,326 million NLG compared with 5,252 million NLG in 1990. Income from operations increased by 24.6 percent to 735 million NLG from 590 million NLG in 1990. Net income and net income per share were 446 million NLG and 2.62 NLG respectively, both up 24.8 percent on 1990's figures of 357 million NLG and 2.10 NLG. PolyGram is proposing to pay a full year 1991 gross dividend of 0.60 NLG per share, representing a 20 percent increase on its 1990 payout of 0.50 NLG. The dividend, which is subject to shareholder approval, will be paid in May 1992.
Said PolyGram's president and chief executive officer, Alain Levy: "These excellent results bear witness to the relative resilience of recorded music in a time of recession and are a tribute to the skills of PolyGram's worldwide management teams. In 1991, we enjoyed our seventh year of consecutive growth and increased our share of the global recorded music market from 17.5 percent to an estimated 18.5 percent.
"While we are pleased that our North American operations are back in the black," he continued, "we still have some way to go before we reach our long-term North American market share and profitability goals."
Improvements in PolyGram's North American distribution operations helped it secure the American distribution and Canadian license for Motown Records with effect from September 1991. The company also acquired the Motown license for the rest of the world as of January 1992.
PolyGram's group performance benefited from a number of investments made during 1991 including its establishment of a new subsidiary in Chile and its acquisitions of Scandinavian record company, Sonet; CD manufacturing operations in France and Germany; an initial 30 percent stake in Andrew Lloyd Webber's Really Useful Holdings; an additional 23.5 percent stake in Polydor KK in Japan; and the remaining 40 percent stake in PolyGram Taiwan.
Crediting most of PolyGram's operating companies with strong performances in 1991, Jan Cook, PolyGram's executive vice president and chief financial officer, said: "I am pleased to say that despite difficult selling conditions in a number of our key markets, the group improved its operating margin to 11.6 percent of sales in 1991 from 11.2 percent in 1990."
He added: "Even after major acquisitions in 1991, we ended the year with liquid assets of 328 million NLG, total bank borrowings of 138 million NLG, up only six percent over 1990, and gross cashflow up 26 percent to 780 million NLG, which underlines PolyGram's strength in cashflow generation."
Six of PolyGram's pop albums sold over three million units each worldwide during 1991, three times as many as in 1990. They were: Bryan Adams' "Waking up the Neighbors," Dire Straits' "On Every Street," U2's "Achtung Baby," Sting's "The Soul Cages," the Scorpions' "Crazy World" and Amy Grant's "Heart in Motion." Top-selling classical recordings included "Carreras, Domingo, Pavarotti -- In Concert" which has sold a total of seven million units since its release and the "Complete Mozart Edition" which sold a further 32,000 sets last year bringing its total sales to date to the equivalent of over 8 million units.
From PolyGram's filmed entertainment division, best-selling videos last year included "Carreras, Domingo, Pavarotti -- In Concert" which has sold over one million units to date and "Two Rooms: Celebrating the songs of Elton John and Bernie Taupin." Also during 1991 PolyGram completed its seventeenth film since it re-entered the movie business in 1985. Of PolyGram's total net sales in 1991, video accounted for eight percent and film one percent.
"Our steady progress in movies has enabled us to build experience in successfully managing the risks associated with the film industry," said Levy who last year announced a three-year plan for the expansion of PolyGram's filmed entertainment business effective in 1992.
Commenting on the outlook for 1992, Levy said: "Our strong release schedule will help to ensure continued sales growth this year." Major PolyGram acts scheduled to release albums in 1992 include Def Leppard, Bon Jovi, Elton John, Tears for Fears (Greatest Hits), INXS, The Cure, Melissa Etheridge, Chris de Burgh and the Neville Brothers. Classical releases include "Beethoven in Berlin" conducted by Claudio Abbado with the Berlin Philharmonic, the "Mozart Requiem" conducted by Sir Georg Solti with the Vienna Philharmonic and Prokofiev's "War and Peace" performed by Russia's Kirov Opera Company. Said Levy: "I am also encouraged by our recent success in the vital area of breaking new talent with acts such as PM Dawn, Black Sheep, Ce Ce Peniston, Ugly Kid Joe and Soundgarden."
PolyGram NV is a Dutch-registered company. Twenty percent of its shares are listed on the Amsterdam and New York stock exchanges and the remaining 80 percent are held by Philips Electronics NV.
Preliminary 1991 Income Statement
(In millions of Netherlands guilders (NLG)
except per share data and share amounts)
Years ended Dec. 31 1991 1990 Increase
Net Sales NLG 6,326 5,252 +20.5
Direct costs of sales NLG (3,391) (2,774) +22.2
Gross Income NLG 2,935 2,478 +18.4
Selling expenses NLG (1,712) (1,441) +18.8
General & admin. expenses NLG (488) (447) +9.2
Income from operations NLG 735 590 +24.6
Financial income & expenses NLG 18 (6)
Income before taxes NLG 753 584 +28.9
Income taxes NLG (238) (201) +18.4
Income after taxes NLG 515 383 +34.5
Equity in net income of non-
consolidated companies NLG (28) (5)
Group Income NLG 487 378 +28.8
Minority interests NLG (41) (21)
Net income NLG 446 357 +24.8
Average no. of shares outstanding
(millions) 170 170
Net income per share NLG 2.62 2.10 +24.8
Balance Sheet/Cashflow Highlights
Liquid Assets NLG 328 439
Total bank borrowings NLG 138 130
Gross cashflow NLG 780 621
NOTE FOR CONVERSION INTO US DOLLARS: The rate of exchange as at Dec. 31, 1991 was NLG 1 - US$0.585
/CONTACT: Amanda Whitwell of PolyGram International, London, 44-71-493-8800/
(PLG) CO: PolyGram NV ST: IN: ENT SU: ERN SM -- NY011 -- 5303 03/05/92 09:17 EST