Yell's revenue to remain pressured as Q1 sales fall
Wednesday, 28 July 2010 19:17
Directories firm saw resilient performance in Spain, Argentina, Chile and Peru operations.
Directories firm Yell Group PLC Wednesday said revenue is set to remain under pressure in fiscal 2011 until there is a meaningful economic recovery, as it posted a 7.5% drop in first-quarter sales.
The debt-laden firm, which publishes the Yellow Pages but has been trying to grow its online presence, had expected trading conditions to start improving at the beginning of 2010 but admitted a recovery was "proving slower than expected."
Revenue in the three months to June 30 fell to GBP439.6 million from GBP475.3 million, which Yell said was in line with guidance.
Sales dropped 12.9% in the U.K. and by 10.3% in the U.S., although there was a more resilient performance in its Yell Publicidad business, which covers Spain, Argentina, Chile and Peru, where sales dipped just 1.5%.
Yell said its ongoing focus on managing costs had protected margins and partially offset the revenue fall.
Pretax profit took a hit, falling to GBP16.8 million from GBP18.5 million a year earlier.
"The recent history of Yell is a series of trading statements punctuated with the odd bright spot, but with an overall impression of a company in terminal decline," Richard Curr, head of dealing at Prime Markets Ltd., told clients in a note.
Curr said Yell's business is still fundamentally rooted in print, with its online offer appearing to have made little impact alongside the likes of Google Inc.
"The statement today is simply the latest episode in managing a huge debt pile and attempting to imply that once the recovery arrives, fortunes will change," Curr said. He rates the stock "sell."
Numis Securities analyst Paul Richards believes there is a "strong likelihood of a further equity raise," although Yell's Finance Director John Davis said the company--which is saddled with a debt of just under GBP3 billion--had no intention of tapping investors for more cash.
At 1232 GMT, Yell's shares were trading 4 pence, or 12.3%, lower at 26 pence, underperforming a 0.3% dip in the Dow Jones U.K. Smaller Companies index.
Yell's core business is its print directories but it proved hard to attract new customers to its books during the recession. Nonetheless it said it was successful at retaining existing customers.
Printed directory sales in the U.K. fell more than 19% in the quarter to GBP84.8 million from GBP105.2 million.
A positive among Yell's results was the continued rise of online sales. Yell's sales through its Yell.com U.K. website rose nearly 3% to GBP44 million from GBP42.8 million a year earlier.
Total online sales climbed 9.7% in the quarter to GBP111.6 million and online sales now form 25% of Yell's total revenue.
The firm stands by its focus on print and CFO Davis said:"It's just one route to market, as is the internet and mobile, but we believe print is a very cost-effective channel and many of our print clients' spend is remaining at the same level."
(Source: Total Telecom)
Directories firm Yell Group PLC Wednesday said revenue is set to remain under pressure in fiscal 2011 until there is a meaningful economic recovery, as it posted a 7.5% drop in first-quarter sales.
The debt-laden firm, which publishes the Yellow Pages but has been trying to grow its online presence, had expected trading conditions to start improving at the beginning of 2010 but admitted a recovery was "proving slower than expected."
Revenue in the three months to June 30 fell to GBP439.6 million from GBP475.3 million, which Yell said was in line with guidance.
Sales dropped 12.9% in the U.K. and by 10.3% in the U.S., although there was a more resilient performance in its Yell Publicidad business, which covers Spain, Argentina, Chile and Peru, where sales dipped just 1.5%.
Yell said its ongoing focus on managing costs had protected margins and partially offset the revenue fall.
Pretax profit took a hit, falling to GBP16.8 million from GBP18.5 million a year earlier.
"The recent history of Yell is a series of trading statements punctuated with the odd bright spot, but with an overall impression of a company in terminal decline," Richard Curr, head of dealing at Prime Markets Ltd., told clients in a note.
Curr said Yell's business is still fundamentally rooted in print, with its online offer appearing to have made little impact alongside the likes of Google Inc.
"The statement today is simply the latest episode in managing a huge debt pile and attempting to imply that once the recovery arrives, fortunes will change," Curr said. He rates the stock "sell."
Numis Securities analyst Paul Richards believes there is a "strong likelihood of a further equity raise," although Yell's Finance Director John Davis said the company--which is saddled with a debt of just under GBP3 billion--had no intention of tapping investors for more cash.
At 1232 GMT, Yell's shares were trading 4 pence, or 12.3%, lower at 26 pence, underperforming a 0.3% dip in the Dow Jones U.K. Smaller Companies index.
Yell's core business is its print directories but it proved hard to attract new customers to its books during the recession. Nonetheless it said it was successful at retaining existing customers.
Printed directory sales in the U.K. fell more than 19% in the quarter to GBP84.8 million from GBP105.2 million.
A positive among Yell's results was the continued rise of online sales. Yell's sales through its Yell.com U.K. website rose nearly 3% to GBP44 million from GBP42.8 million a year earlier.
Total online sales climbed 9.7% in the quarter to GBP111.6 million and online sales now form 25% of Yell's total revenue.
The firm stands by its focus on print and CFO Davis said:"It's just one route to market, as is the internet and mobile, but we believe print is a very cost-effective channel and many of our print clients' spend is remaining at the same level."
(Source: Total Telecom)
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