Yell warns its annual profit will fall short

SHARES in Yellow Pages publisher Yell tumbled yesterday after the directory business said its full-year earnings will miss market forecasts.

The firm said its pre-tax profits fell to £38.6m in the nine months to the end of December, from £75.1m in the same period a year ago, as it blamed sliding revenues from its core printed directories.

Group revenue was down 11.8 per cent to £1.35bn, with the company adding that “the current financial year is now expected to be slightly below the current range of market expectations”.

The stock closed 16 per cent down at 8.85p.

Yell, which also runs units in the US, Latin America and Spain, has been hit by the decline of its printed directory business as customers switch to digital media. Sales from its printed directories, which account for almost 70 per cent of revenues, fell to £936.6m in the nine-month period from £1.13bn last year.

The company also labours under a £2.8bn debt pile, which it raised after a number of overseas acquisitions during the last decade.

Standard & Poor’s recently downgraded Yell’s credit rating to “junk” status – below investment grade – and revised its outlook from stable to negative. The rating agency added Yell was unlikely to meet its guidance on earnings, debt and banking covenant headroom in 2011-12.

The firm’s new chief executive Mike Pocock, who took over in January, told investors last month he wants to boost its online sales as quickly as possible. He plans to update the market on the conclusions of his business review in June. In a bright spot for the firm, sales at its digital media division rose 10 per cent on a constant currency basis to £342.2m over the last nine months.