March 18, 2008 / 7:39 PM / 11 years ago

UPDATE 1-Seat sees falling profit, will not pay dividend

(Adds details, company statement)

MILAN, March 18 (Reuters) - Italian yellow pages publisher Seat Pagine Gialle PGIT.MI on Tuesday said it will not pay a dividend and forecast falling profit as it boosts investments this year.

Net profit last year rose 23 percent to 98.4 million euros ($155.6 million) on lower interest payments, the company said in a statement. Net financial debt totalled 3.27 billion euros at the end of the year, down by 131.5 million euros.

Seat will not pay a dividend this year because, it said, “in the current credit market environment, the company has adopted a financial policy devoting available financial resources to debt repayment and Internet development in Italy.”

Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6.3 percent to 650.2 million euros in 2007. The Turin, Italy-based company said it expects 2008 EBITDA to decline to about 610 million euros as it boosts investments that, it said, will pay off in 2009.

Chief Executive Luca Majocchi will present the results to analysts in Milan on Wednesday morning.

Seat shares have lost half of their value so far this year and closed down 3.9 percent to 13.4 euro cents in Milan on Tuesday, compared with a 2.7 percent rise in the S&P/Mib index.

Directories publishers are heavily indebted and are the type of mid-sized companies readily sold during a generalized equities sell-off like the one of the past months.

British-based directories business Yell Group YELL.L Chief Executive John Condron in a recent Sunday Times newspaper interview was quoted as saying: “The perception is that the business model is broken. It is emphatically not.”

Seat’s management must regain the market’s trust after failing to meet EBITDA targets for three years in a row.

Laboring under a mountain of debt and unable to find a suitor last year, Seat lacks a catalyst to attract investors and its stock will likely perform no better than its sector and the market as a whole this year, analysts have said.

Following a leveraged buyout in 2003 by private equity firms BC Partners, Capital Partners, Investitori Associati and Permira [PERM.UL] — who hold 50.4 percent of its equity — Seat’s debt is now almost double its market capitalization .

Seat publishes directories in Italy and Britain and has invested heavily in directory assistance numbers in Italy and France that the public can call, for a fee, to find phone numbers or business listings. ($1=.6324 Euro) (Reporting by Mathias Wildt, editing by Gerald E. McCormick)

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