In the interim management statement, the £439m group said that sales for the nine months up to 1 May were up 2.7% year on year.

According to the company, the Royal Mail and Sainsbury's contract wins had offset falling sales in other divisions. However, the group said the mix of sales of the two deals were "less beneficial", partly due to the amount of work that needed to be outsourced and this resulted in "lower added value".

"The [difficult] market conditions are not unique to any particular sector, we're feeling the impact across the board to varying degrees," said chief executive Patrick Martell.

He added that the magazine market was especially challenging. "The combination of current prices, volumes and the cost base is a problem for us and the industry as a whole."

Last month the group proposed the closure of its Andover magazine site, which could result in 100 job losses and followed 100 cuts across the Web division in January.

"Obviously we keep the whole business under review and you can see the action that we've taken to date and it's important that we continue to take action," said Martell.

According to finance director Matt Armitage the group had already stated that the 2008/2009 results would be weaker than those of the previous year, but added that "they're going to be a bit lower still". He added that while sales for the full year were expected to be only slightly below last year, the real concern for the group was falling margins.

"It's price pressure. The dynamic is different within each market, but the one that has been hit the worst is the magazine market. Any top lines that are holding up, do I'm afraid, come at the expense of prices," added Armitage.

At the time of writing, the group's shares had fallen 20p from an opening price of 82p.

Meanwhile, Martell confirmed the appointment of Giles Richell as managing director following a handover from operations director Brad Gray, who remains with the company in an unspecified role. Martell also said that the Edenbridge web press that was damaged by an oven explosion last month, was due to come back on stream shortly following the installation of a new oven.

The cause of the explosion is still being investigated.