Polygram Net Rises 9 Per Cent

Dutch music and film group PolyGram NV reported a nine percent rise in 1997 net profits on Wednesday and voiced optimism about its prospects this year despite concerns about demand for music in Asia. Net income rose to 787 million guilders ($385.7 million) last year from 722 million in 1996, a figure in the middle of analysts forecasts. For the year as a whole, we feel we have an exciting line-up of music and film releases and we are optimistic about the outlook for 1998, PolyGram chairman Alain Levy said in a company statement accompanying the 1997 results. As in 1997, our film slate is weighted to the second half while, on the contrary to 1997, this is also the case for our music schedule. Reuters

 

Music remained the key prop for the bottom line. Sales and operating profit both rose by 17 percent to 9.304 billion and 1.307 billion guilders respectively as three of the groups albums topped the five million unit sales mark and the market in the United States began to improve.

However, Levy cautioned that the current Asian economic slowdown could have an impact on music demand during 1998. It had a small impact on sales in 1997.

Thanks to our strong position both within the region and in the rest of the world, we believe that PolyGram is well-positioned to combat the problems in Asia and we remain confident of the long term growth potential of its music markets, he continued.

The film division sustained a full year loss of 109 million guilders, but edged into profit, of 15 million guilders, in the fourth quarter. Full year sales rose by 16 percent to 1.791 billion guilders.

The best of its movie batch was Bean, which grossed over $220 million at the box office.

On Wednesday, PolyGram shares rose by over four percent in early business in Amsterdam to 101.00 guilders, but were trading below 100 by mid-morning, standing at 98.00 at 1000 GMT, a rise of 1.50 guilders.

The figures are broadly in line with expectations...The share price reaction must be out of relief, said Andre Moons of ING Barings.

Philips Electronics NV has a majority stake in PolyGram.

($ = 2.040 Dutch Guilders)