Daily Mail sales slump as advertising conditions improve

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The Independent Online

British newspaper group Daily Mail & General Trust today said advertising conditions had improved in April and May, and full-year results should be in line with market consensus, as a deep gloom over the recession-hit sector begins to lift.

The owner of the national Daily Mail and regional newspapers said adjusted earnings per share fell 49 per cent to 14.2 pence but revenue and cost-saving measures would now improve profits by £150 million pounds this year.

"April and May have seen an improving trend," it said in a statement, referring to national newspaper advertising.

British regional newspaper publishers Trinity Mirror and Johnston Press both said last week they saw signs of stabilisation in the advertising market after steep declines this year to date.

Daily Mail's first-half sales fell 7 per cent, driven by a slump in ad revenues, especially from the small companies that make up the bulk of classified ads in the regional press. The decline in regional advertising stabilised at 36 per cent in April.

Total sales for the six months to the end of March were £1.085 billion, the company said. It kept its interim dividend unchanged at 4.80 pence.

Analysts said the results were ahead of their expectations, helped by the resilience of business-to-business activities that brought in 79 per cent of sales in the first half.

At 0815 GMT, Daily Mail shares were down 1.2 per cent at 307.75, following on a brief rise as high as 331.5 pence and after a rise of 18 per cent so far this year. The European media index .SXMP was up 1.4 per cent.

Brokerage Numis raised its recommendation to "buy" from "add".

"We... are encouraged that the stability in non-recruitment advertising the group reported in its pre-close statement has continued," Numis wrote in a note.

A decline in advertising revenues at regional newspaper division Northcliffe Media -- hardest hit by small advertisers cutting their budgets -- was 36 per cent in April, unchanged from the second quarter to March.

The group said in March it was doubling the number of planned job cuts at Northcliffe to 1,000, about 22 per cent of the unit's staff.

Daily Mail's underlying national newspaper advertising revenues fell 15 per cent in the first half, with an improvement in April and May.

The company said its results for the full year should match the market consensus, which it has are about £198 million for pretax profit before exceptionals and earnings per share of 33.3 pence.

Daily Mail is protected to an extent from the collapse in newspaper advertising revenues by its business-to-business (B2B) publications at its Euromoney (ERM.L) unit, an international exhibitions business and an Australian radio group.

Together, B2B operations brought in 79 per cent of group sales in the first half, and the company said it expected to achieve growth overall in the rest of the year in these businesses.