Mail group detects signs of advertising recovery

Daily Mail & General Trust, publisher of the Daily Mail and Evening Standard newspapers, has seen signs of a recovery in the UK advertising market, but has stopped short of calling an end to the downturn.

Advertising revenue at UK newspapers has come under severe pressure as a result of ad sales migrating to the internet and greater competition in the sector after the launch of a number of new titles.

DMGT, which also owns the free newspapers Metro and London Lite, recorded a 6 per cent decline in print advertising revenue in the year to October but said that there were signs of a pick-up over the past three months.

Peter Williams, DMGT's finance director, remained cautious despite feeling more confident.

"We are not holding our breath as there is no forward visibility in this market. We are not expecting a major recovery in the consumer advertising market but, with a little luck, a gentle recovery," Mr Williams said. "There have been one or two false dawns over the last 12 months," he added.

Advertising revenue increased by 1 per cent in September and by 2 per cent in October. November is expected to improve further.

Mr Williams said that there is also cause for optimism regarding a recovery in classified advertising that could be "back in positive territory some time in the early new year". He added that the rate of decline in recruitment advertising had eased markedly.

On the circulation front, the Daily Mail recorded a 0.4 per cent decline in circulation over a period when it raised the price of the newspaper by 5p.

Numis Securities analyst Paul Richards said that compares to an overall market decline of 2.8 per cent over the same period.

However the Evening Standard's circulation fell 8 per cent as the launch of free evening titles started to bite. Mr Williams said he was "pleasantly surprised" that the paper had not suffered more severe declines and noted that there has been no impact on advertising revenue at Metro as a result of the new competition.

Mr Williams said that advertising at its London Lite free evening title was picking up "but it is proving quite tough". He added that the company's classified title, Loot, continues to struggle but will benefit as more of its content is moved on-line.

Despite the fall in advertising revenue, DMGT reported a 9 per cent rise in profit before tax for the year to £260m as it benefited from cost-cutting and a doubling of growth at its digital operations.

It said it derived almost 47 per cent of its operating profit from activities outside its newspaper operations.