A STEEP decline in compact disc sales last year resulted in Universal Music's Irish subsidiary taking a 39.4 per cent hit to its after-tax profits.

Accounts just filed for Universal Music Ireland Ltd show that its after-tax profit declined to €4 million in 2007 from €6.6 million the previous year.

Turnover was down by 22 per cent at €21.1 million, due in large part to a 21 per cent decline in CD sales. The termination of a deal to distribute on behalf of Universal Pictures, sold by its global parent Vivendi, was also a factor in the fall. In spite of this, the Irish company paid a dividend of just more than €7 million to Vivendi in 2007.

Mark Crossingham, Universal's newly installed managing director here, said he expected the business to achieve a similar level of revenue and profit in 2008.

"The year to date has been good for us because we have a strong release schedule, which has given us a lot of radio play," he said. "We're on budget to achieve a similar outcome for this year, which in a declining market and a challenging economy is a good result."

Mr Crossingham said sales of CDs had continued to decline this year but revenue from digital downloads had soared.

In terms of singles, CD sales in the year to date are down 40 per cent against a 34.5 per cent rise in downloads. For albums, CD sales have declined by 11 per cent while downloads are up 71 per cent. The revival of vinyl has resulted in a 9 per cent uplift in sales of albums.

In spite of the strong recent growth in downloads sales, they still account for just 7 per cent of Universal's total business, Mr Crossingham said.