Revenue plunge puts more pressure on Yell

Yell, which hopes to reinvent itself as an online hub for businesses and consumers, said revenues at its traditional operation declined to £263.6m in the quarter to June 30, following on from a drop of 18 per cent, to £1.3bn, in its last financial year.

Digital revenues increased by 11 per cent, to £119.7m, in the first quarter, as the number of companies paying to use its online services increased eight per cent, to 927,000.

But this was not enough to offset the decline in its print business, which has been battered by internet competition. Overall revenues fell 11 per cent, to £383.3m, while underlying profits were down 16 per cent, to £109.1m.

As part of its plans to return to growth by 2015 , Yell last week announced a strategy to create an ‘eMarketplace’ website concept that allows consumers to find businesses in their area. It will also sell services to local businesses registered on its site, including loyalty schemes, marketing initiatives and computer software to help them do their accounting, and payment schemes to save them money on financial transactions.

Mike Pocock, chief executive officer, said: “Yell intends to become the leading SME digital services provider and will bring consumers and SMEs together to establish a new local online market place.”

Online services, such as helping businesses create their own websites and promotional videos, which will play a key part in its new strategy, saw their revenues more than double, to £30.2m, in the quarter.

This boosted Yell’s online revenues, offsetting a seven per cent decline in turnover from its online directories, such as Yell.com, which saw their visitor numbers decline by 29 per cent, to 39m.

Shares fell yesterday as investors took fright at another set of declining figures from the company, which is saddled with £2.7bn debt.

In the year to March 31, revenues were down 12.4 per cent, to £1.9bn, while operating profits fell to £330m, from £409.3m a year earlier.

Lorna Tilbian, an analyst at Numis Securities, downgraded her underlying profit forecasts for the current year by five per cent to £461m.

She said: “There is clearly ongoing cyclical pressure on small and medium-sized business marketing budgets and we are concerned that the decline in digital directories’ visitor numbers reflects the difficulty in achieving online market share, which we view as key to pricing power.”