Trinity Mirror warns over profits

Daily Mirror and regional newspaper publisher Trinity Mirror today warned over full-year profits as it said advertising revenues were suffering a "marked" decline.

The group, which also publishes the People and the Daily Record in Scotland, said operating profits were set to come in around 10 per cent lower than market hopes.

Trinity Mirror shares lost more than a quarter of their value on the profits gloom. The firm blamed economic uncertainty and the credit crunch for its advertising woes.

It revealed that underlying group revenues sunk by around 7.8 per cent in the nine weeks to 29 June, with underlying ad sales down around 12.6 per cent.

Circulation revenues also fell in the past nine weeks, down around 2.4 per cent.

Trinity Mirror said: "We have seen a marked year on year decline in advertising revenues across our businesses during May and June and this is expected to continue for the remainder of the year."

The poor performance in May and June is expected to lead to an overall half-year drop of 4.5 per cent in underlying group revenues.

Trinity signalled that advertising revenues in its regional and Scottish national businesses were expected to be worst hit, around 7.5 per cent compared to a 6.1 per cent expected fall in UK nationals.

Within the regional ad sales decline, property and motors ads are predicted to be hardest hit with expected falls of around 17 per cent and 17.5 per cent respectively for the 26 weeks to 29 June.

Digital sales, however, continue to increase, up around 24.4 per cent on an underlying basis in the past 26 weeks.

Trinity Mirror said it would seek to cut costs where possible to help offset the ad sales slump.

It is on track to save £7m this year as part of a plan to cut costs by £20m by the end of 2008, according to the group.

Trinity Mirror is also cancelling the remaining £67m of a planned £175m share buy-back and cautioned that it may be forced to writedown the value of some of its assets in view of the tough trading environment.

Analysts at Landsbanki cut full-year pre-tax profits forecasts by 11 per cent to £130.9m and said shares in the group were likely to fall further still.