The "unprecedented" fall in the advertising market and hefty impairment charges sent the Daily Mail's parent company to a first-half loss, it reported yesterday. The group responded by upping its cost-cutting targets and revealed it had axed 500 more jobs.
Daily Mail & General Trust (DMGT) announced it had swung to a £239m pre-tax loss in the six months to 29 March, from a £23m profit in the corresponding period last year.
The publisher was hit by impairment charges of £232m, as it was forced to write down the value of assets bought by its regional, business and radio arms, following the onset of the recession.
Stripping out the exceptional charges, pre-tax profits at DMGT almost halved to £77m in the first half, down from £144m the previous year. It blamed the worsening trading conditions for the performance.
Its chief executive, Martin Morgan, said yesterday: "The overall first-half result has been badly affected by the impact of the recession on our consumer media advertising revenues."
The outlook for the year was more positive. Viscount Rothermere, the group's chairman, expects growth from the business-to-business arm, and added that its national newspapers should benefit from the cost-cutting programme and the sale of the London Evening Standard. It offloaded the majority of the Standard to the Russian oligarch Alexander Lebedev in February.
DMGT was relatively confident for the rest of the year. "Although there remains little visibility on UK advertising revenue trends, we currently expect the full-year result to be in line with the market consensus," it said.
Mr Morgan, presenting his first half-year results since taking over in October, said the management had taken "decisive action" to maintain profits, adding the initiatives will help the group's bottom line during the expected weak trading conditions in the second half of its financial year.
The decisive action included expanding its cost-cutting programme. DMGT had set a target of saving £100m this year, but yesterday increased that figure to £150m. The management talked of a "narrowing" of its portfolio, analysts at Numis said, and believe potential disposals would include assets in its consumer divisions.
Associated Newspapers, the division that includes the Mail titles and London Lite, suffered "significantly lower" profits due to "unprecedented trading conditions". Operating profit at the division fell from £44m in the first half of 2008 to £18m this year, as advertising was down 16 per cent.
The group sounded a note of cautious optimism over the future of the advertising market, saying that after a 23 per cent fall in the second quarter, it was down "only" 15 per cent in April and May.
Northcliffe Media, the group's regional arm, has particularly suffered in the downturn, and it reported that profits nose-dived in the first half. The business has suffered from the collapse in classified advertising, and profits fell 91 per cent to £3.2m. The division was helped as costs were 20 per cent lower than last year.
At its update in March, DMGT announced it had cut 1,000 jobs, predominantly at Northcliffe, double the number it had targeted just four months previously. Yesterday it said the cuts had increased to 1,500, although the latest departures stretched across the DMGT group, and most had already been carried out.
DMGT's business-to-business division propped up the group in the first half of the year. It generated 79 per cent of the operating profit, up from 53 per cent last year.