Last year was the first profitable year for City AM, which launched in 2005, after revenues grew by 39% to £7.8m.
However, most of its profit (£423,000) was made in the first half of the year, as revealed in October, and the second half performance was hampered by rising costs despite revenue growth again of 39%.
Higher costs included newsprint and distribution, as in order to reach more of its audience at the start of their journeys City AM shifted 20,000 copies out from central London to Surrey, Kent and North London.
Jens Torpe, the chief executive, said the distribution change "cost a significant amount of money" which he claimed was justified by a survey carried out by YouGov in May that showed City AM attracts the most affluent readership of any newspaper in the country.
City AM readers have an average annual income of £66,000 compared to £62,000 for FT readers, according to the research.
Newsprint costs increased by 30% from 1 July 2010 and were set to increase by another 4% on the same date this year, according to Torpe.
However, Torpe claimed to be "optimistic" about the outlook, saying "even with the increased costs our revenues are up so we will definitely be profitable" in 2011.
Torpe admitted it was difficult to predict where the market was going given the uncertainty about European sovereign debt, saying "let's say that if everything stays as it is, looking at our bookings for the remainder of the year and the other projects we have we expect to come out more or less like we did for 2010."
Around 95% of City AM's revenues come from advertising, though the company will soon launch a paid-for app, which was due to arrive in February.
Blaming "teething problems" for the delay, Torpe said the app would now launch in September and confirmed it would be charged for on a subscription basis.
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