Price of newsprint knocks Telegraph profits

The Daily and Sunday Telegraph saw pre-tax profits fall 7 per cent to £54.5m last year as "substantially higher" newsprint costs took their toll.

Its parent company Telegraph Media Group increased turnover by 2 per cent to £331m, with growth in advertising, digital and non-newspaper revenues such as selling financial and travel products to readers.

Circulation revenues were flat as falling sales were offset by The Daily Telegraph increasing its cover price in November. But the company admitted the cost of newsprint and investment in "digital development" had pushed down profits in the year to 1 January 2012.

"The group delivered a solid performance despite the challenging economic climate, particularly in the second half of the year," it said.

TMG is just the latest newspaper group to warn about newsprint costs after Trinity Mirror said earlier this month that surging prices had cost it an extra £22m last year.

The Telegraph papers were bought by Sir David and Sir Frederick Barclay, above, in 2004.