Newspaper publisher Trinity Mirror, owner of The Birmingham Post, said it expected advertising revenue to have fallen around three per cent in January and February this year and unveiled flat underlying pretax profit for 2007.
But ongoing cost control and resilient cash flows were bolstering the group.
"The uncertain economic outlook for the UK, together with the volatility, has contributed to a weak start to 2008 in the advertising market," Trinity said.
The owner of the Daily Mirror and a host of newspapers around the country said the monthly volatility seen in the advertising market was likely to be an ongoing feature this year.
Chief executive Sly Bailey said that while Trinity was cautious about trading in 2008, the company expected a satisfactory performance for the year.
She noted: "In challenging trading conditions our focus and commitment to drive continuous improvements delivered a strong performance in 2007. Although we are cautious about trading in 2008, the board anticipates a satisfactory performance for the year given the continued implementation of the group's strategy, ongoing focus on cost control and resilient cash flows."
Trinity said its pretax profit on retained and sold businesses in the year to the end of December was £191 million, compared with £192 million a year ago.
Group revenue was £1.009 billion, compared with £1.073 billion last year.
The company said it aims to substantially boost its digital-related revenues via new launches and acquisitions. Digital revenues currently account for 3.7 per cent of total revenues and 6.7 per cent of advertising revenues on Trinity's retained businsses.
Trinity sold its sports division and several regional newspaper assets during 2007 and decided to keep its Midlands operations after it did not get high enough offers.
The disposals process realised gross proceeds of £263 million. The company said it proposed to keep the final dividend at 15.5 pence per share.
Group revenues from the retained businesses increased by £15.1 million to £932.3 million. Group operating profits from the retained businesses rose by £6.4 million to £186.1 million.
The operating margin for retained businesses increased by 0.4 per cent to 20 per cent.
The company stated: "Trinity Mirror experienced an encouraging but volatile advertising environment for much of 2007 which was an improvement to the market conditions seen during 2005 and 2006. The generally healthier market conditions contributed to a strong performance for the year."
Acquisitions during the period included Totallylegal.com Limited, owner of totallylegal.com and totallyfinancial.com, strengthening the group's presence in the digital recruitment market; the Career Engineer; and Globespan Media which boosted both print and digital overseas property advertising.
Trinity stated: "Going forward, our aim is to increase substantially digital revenues as a proportion of total group revenues. We aim to achieve this by both launch and acquisition and have increased our resources in order to accelerate progress."
It said the Regionals division had achieved a good performance despite the volatile advertising market.
"Performance from our regional digital activities was particularly strong with revenues up 33.3 per cent and audience figures up 27.8 per cent on 2006."
And it went on: "The completion of our disposals process saw the sale of seven sub-regions in the South and the Sports division.
"Offers for our businesses in the Midlands and the two remaining sub-regions in the South, did not reflect the board's assessment of their true value, their earnings potential or the strong positions they hold in their particular markets. Therefore the board decided to retain these businesses and focus on their growth and development.
"These businesses are now benefiting from being fully integrated into the group's technology-led operating model, which will enable them to focus on new revenue-earning opportunities and reduce costs."
The Nationals division "achieved a strong profit performance against a background of an extremely competitive circulation environment".
The company added: "Across the national popular newspaper market, circulations continued to decline year-on-year. Whilst competitors distorted their underlying sales, through heavy marketing activity and cover price discounting, we continued to publish our national titles at their full cover prices, which we continue to believe is the right strategy for maximising value."