Revenue and earnings at Telstra directories business Sensis will fall over the next three years as it works to make more money from digital products in the face of declining income from Yellow Pages print.
Sensis chief executive Bruce Akhurst launched a new strategy focussed on selling bundled packages of print and digital advertising to customers as he conceded it would take until financial year 2014 before the group regained revenue growth and profitability.
“We expect Sensis to return to organic revenue growth in about three years,” Mr Akhurst said.
“This year, in full-year 2011, we expect mid single-digit revenue decline and high single-digit (underlying earnings) decline subject to the Queensland floods.
“We expect to see similar trends in full-year 2012 and 2013.”
Sensis has been working on its plan for the past two years, said Mr Akhurst, and its sales staff of about 1000 will today begin selling more digitally focussed products that it hopes will expand the customer base and repatriate advertisers that have deserted the print product.
“In terms of key metrics you’ll see us grow customer numbers, reduce churn, you’ll see us grow customer penetration in digital products, you’ll see us grow total digital sales and the total value of packages we sell,” Mr Akhurst said in Sydney this morning.
But the transition will take at least three years and the gap between the high margins Sensis enjoyed in print will not immediately be offset by new customer gains from digital products such as web listings.
“Part of the revenue increase in these gains will be offset by a reduction in average revenue per advertiser as Yellow Pages print yields fall while Yellow Pages digital yields increase,” Mr Akhurst said.
Yellow Pages print and online make up the lion’s share of revenue for Sensis at about 55 per cent. But with the digital component of revenues representing just over 20 per cent, Mr Akhurst said Sensis was keen to increase that to about 50 per cent.
Unlike its global directories peers, which had experienced dramatic declines in revenue and earnings, Sensis managed to deliver high single-digit growth from full-year 2005 to 2008 before experiencing a slow down in 2009.
That decline accelerated to 4.1 per cent in 2010 and caused quite a lot of disquiet in Telstra’s last half-year results, when Sensis recorded an 8.3 per cent fall in underlying revenue.
Tracy Lee – March 29, 2011 – 3:53PM
theaustralian.com.au/business/media/sensis-widens-digital-embrace-as-yellow-pages-print-revenue-falls/story-e6frg996-1226030171698