Universal Music Group's global business shows resilience in Q2 2020

By Emmanuel Legrand

Universal Music Group weathered the pandemic crisis rather well, with revenues for the first six months of the year up 3.5% to €3.459 billion (at constant exchange rates and scope) compared to the first half of 2019 (+ 6.2% in real terms). In the first half of 2020, the EBITA of the Vivendi subsidiary amounted to €567m, up 16.6% year-on-year. The good results are linked to sales growth and cost containment, according to Vivendi.

Recorded music revenues were up 3.7%, driven by growth in subscription and streaming revenues, which increased 12.4% during the half-year, and the receipt of a non-specified non-digital royalty. "This increase was achieved despite the impact of the COVID-19 pandemic,which mainly affected the second quarter of 2020. Physical sales were down 22.4% compared to the first half of 2019, while download sales declined by 23.1%," Vivendi said in a statement.

Universal Music Group Publishing's revenues increased by 21.2% at constant exchange rates and perimeter compared to the first half of 2019. The music publishing subsidiary saw its revenues benefit from the increase in revenues from streaming. UMPG also benefited from the collection of a digital royalty claim, separate from that mentioned for recorded music.

Vivendi Village impacted

Within the Vivendi group, UMG and Canal + Group have shown resilience, thanks to an economic model with revenues essentially based on subscriptions. However, advertising division Havas Group and live operations Vivendi Village were directly affected by the coronavirus crisis. Vivendi notes that the containment measures imposed in Europe and Africa in the first half of 2020 have "had a very strong impact on Vivendi Village."

  For Vivendi group, sales amounted to €7.576bn in the first half of 2020, up 3.0% (-2.0% at constant exchange rates and perimeter) compared to the first half-year 2019. The increase is mainly due to the growth in sales of UMG and Canal + Group. In the second quarter of 2020, sales amounted to €3.706bn, down 4.8% compared to the second quarter of 2019.

  Speaking to analysts, Vivendi CEO Arnaud de Puyfontaine said the question of UMG's IPO is still on the agenda, especially after Warner Music Group's successful IPO. "We are welcoming the good results of the Warner Music Group IPO," said de Puyfontaine. "And we said in previous statements that in the different stages as regard to the opening of the UMG capital, our intention was to plan for an IPO no later than early 2023. But as mentioned during the call, we could consider an earlier IPO, if it is possible. So options are open and will depend on different factors that we are currently reviewing."