Kylie Minogue's new album is selling well

People are no longer replacing their old vinyl records with the CD equivalent at the same rate, and record companies are now facing competition from music distributed on the internet.

EMI said sales and profits at its recorded music division had fallen, but said its music publishing division was showing strong growth.

Recent albums by Kylie Minogue, Pink Floyd and Lenny Kravitz were selling well, while new releases from Robbie Williams and Mick Jagger are due shortly, just in time for the crucial Christmas sales period.

Solo career

In the past year EMI has attempted to merge with Bertelsmann's music arm, BMG, and Warner Music - but both deals have collapsed because of EU competition concerns.

EMI is now resigned to going it alone, and a lot of hopes are pinned on the new head of its recorded music division Alain Levy.

The company will be hoping he can transform its fortunes, as the business is the largest in the EMI Group.

EMI has pledged to return the music division to profit in the second half of the year through a combination of new releases and cost cutting.

Mr Nicoli said this target was "not out of reach" but he added "the final result will depend critically on market trends which have shown some deterioration in the past two months".

Turnover down

For the six months to 30 September, turnover at the group slipped to �1.07bn from �1.14bn last year.

Operating profits fell from �110.9m to �43.1m, while losses on ordinary activities before tax increased to �56.6m from a loss of �9.7m last year.

Turnover at the recorded music division was down 8.9%, generating an operating loss of �8.1m.