Directories company Yell said on Tuesday it will miss market expectations for full-year profits, after reporting that revenues fell by 12% to £1.35bn in the nine months to the end of December.
The heavily indebted Yellow Pages publisher said that it expects earnings before interest, tax, depreciation and amortisation for the year to 31 March to be "slightly lower" than analyst expectations.
For the nine months to the end of December pre-tax profits halved from £75m to £38.6m, operating profit fell 27% from £335m to £244m and ebitda fell 19% to £386.7m.
Yell also reported an acceleration in the fall of its core revenue stream of print advertising, which accounts for about 75% of total revenues, which was down 18.4% to £936m in the nine months to the end of December. In the three months to the end of December print revenues fell 19.7%, compared with a 17% fall in the previous three months.
"Yell's challenges stem from both economic pressures and, more fundamentally, from the shift to digital media," said the Yell chief executive, Michael Pocock.
"We expect print to continue to decline steadily. That said, print remains highly cost effective for our advertisers and it will continue to be so, complementing digital for many years to come. In this reducing print market, we believe that Yell continues to gain market share."
The decline in print revenues is not being bridged by growth in digital media with Pocock formally announcing an "in-depth review" of the business. He will present a strategy update for Yell in the summer.
Digital media revenue was up 10.4% to £342.2m in the nine months to the end of December, accounting for 25% of revenue. However the growth rate has flattened at 10% when the three months to the end of December is compared with the previous quarter.
"The digital marketplace is rapidly growing and highly fragmented. It is one where the consumer is a leader and a small market share can mean big business and strong growth," Pocock said. "General search is consolidated. Local search is not, and Yell is already the source of many of the local listings produced by general search engines, as well as growing its own Yell destination sites."
In a breakout of performance by geography for the nine months to the end of December Yell's UK operation reported a print revenue decline of 22% to £231m, with online revenues growing by 1.8% to £135m.
In the US, revenues fell by 17% to £549m with online revenue up 14% to £146m. Yell's European operation reported a 23% fall in print revenues with online revenues growing 23% to £45m.
The company reported that net debt, an area of concern to analysts, fell by £264m to £2.83bn, giving the group more than 20% room on its covenants.
Yell also announced that it has appointed Mark Payne, the former vice-president of worldwide operations at Cisco-owned Linksys, as group chief operating officer. Pocock previously worked at Cisco.
