Trinity Mirror, the publishing group which owns the Daily Mirror, today warned that its full-year profit could be up to 10 per cent lower and hinted it may cut its dividend after dumping its share buy-back programme.

Shares in the company slumped 25 per cent, or 38p, to 113.5p on the warning.

In a bleak trading update, Trinity Mirror, which also owns a swathe of regional titles, revealed that the worsening advertising downturn was hurting the company's profitability.

The publishing group also said that it would be forced to review the value of its publishing titles in-line with accounting rules on the valuation of intangible assets.

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An accelerating decline in advertising income is hurting Trinity's revenues, with turnover falling 7.2 per cent in the first half of the year.

However, the fall-off was even more severe over the past nine weeks when advertising revenue fell by almost 13 per cent.

The overall effect, including circulation and digital revenues leaves Trinity's underlying turnover down by 7.8 per cent over the nine weeks,and 4.5 per cent for the half year.

Trinity said: "We have seen a marked year on year decline in advertising revenues across our businesses during May and June and this is expected to continue for the remainder of the year."

The sombre outlook has persuaded the company to cancel the remainder of a £175 million share buyback programme. Trinity has already repurchased 35.5 million shares, handing back £108 million to investors.

In a broad hint that the company may be forced to take further inititatives to save cash, the company warned: "The board will consider the appropriate level of for the full-year dividend later in the year, when it has better visibility of trading conditions."

The migration of classified advertising to internet websites has hurt Trinity which comprises a stable of some 200 regional newspapers, the traditional home of small ads.

Operating profits from Trinity's continuing businesses rose 4 per cent to £186 million last year and the company raised £263 million from selling a package of regional titles and Racing Post, less than the hoped-for proceeds of £600 million.

In February, when the company announced its full year figures for 2007, Sly Bailey, its chief executive was cautious but optimistic, anticipating "a satisfactory performance for the year."

Trinity continues to bear the burden of the Mirror Group pensions funds which are a continuing cash challenge for the company.

In today's assessment, the company pointed to its strong balance sheet and robust cash flows and the company said that its net debt was estimate to be £425 million at the end of June.

However, it gave a bleak assessment of the outlook for the year. "Month on month volatility remains and this could worsen as we trade through a very unceratain economic outlook. In the challenging advertising environment, management continues to mage the cost base tightly and will continue to seek opporutnities for further efficiencies in operations.

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