Yell warns on lower US growth

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Yell shares lost more than a fifth of their value on Tuesday after the directories group warned that intensifying competition would hit growth in its US business.

Yell, which publishes Yellow Pages in Britain and Yellow Book in the US, said organic revenue growth for the year to March 31 2008 would be around 3 per cent, compared to around 10 per cent in 2007.

”While the underlying share shift towards independent directories continues in the US, the pace of competition has increased as incumbents seek to protect their share and new books are published by both independents and incumbents,” said John Condron, chief executive.

“In the longer term, we believe this will lead to a shake-out in the market. In the near term, though, it will impact the rate of our US organic revenue growth.”

The shares tumlbed 22 per cent in London trading, down 139½p at 473p.

Goldman Sachs, the group’s house broker, downgraded its rating to “neutral” from “buy” and cut its earnings forecasts for 2008 and 2009 by 8 per cent and 14 per cent, respectively.

The group sought to reassure investors by confirming it would meet market expectations for the year to March 31 2007.

Yell bought TransWestern Holdings for £829m two years ago in a bid to take advantage of the fast-growing US market and offset price capping in the UK market.

By last year Yell was reporting strong growth in the region. Total US revenue for the third quarter to December 31 grew 13.9 per cent to £704.5m.

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