Investment: Papers print money for upbeat Newsquest

YOU MAY read about the impending recession in Newsquest's papers, but the country's largest regional newspaper publisher is seeing no signs of a downturn. Yesterday Newsquest produced a sparkling set of results which showed that people are still placing a huge number of advertisements, especially for jobs and property.

In the six months to the beginning of July, Newsquest's advertising revenues - which account for four-fifths of the group's total sales - were up by almost 10 per cent. That helped push pre-tax profits to pounds 35.3m, which is more than the company made in the whole of last year.

Jim Brown, Newsquest's chairman, could hardly have sounded more upbeat. While the Northern titles were good, he said, the Southern ones were even better. And, barring a total economic slump, he reckons the outlook is attractive.

Of course, Newsquest is investing heavily. The company is launching new titles and will spend a total of pounds 15m - most of it in the second half - in equipment such as new pre-press technology. It is also launching plenty of new titles.

The company has several plans to keep revenues growing. It is using websites based on its regional titles to sell more classified advertising, and claims revenues are growing quickly. However, sales from that division are still very small beer.

Meanwhile, Mr Brown continues to size up different acquisitions. The regional newspaper market remains heavily fragmented and, with a new man at the DTI, Newsquest hopes that future attempts at consolidation will not be blocked on competition grounds.

Even so, Newsquest's fortunes remain firmly wedded to the advertising cycle. But with the shares, which bounced 6p to 286.5p yesterday after a sharp fall in recent weeks, trading on a multiple of just 13 times forecast full-year profits, all the downside is in the price. The shares are a long-term buy.