The news sent its share price down 4% in early trading, dropping 30p to 745p. The adjusted profit in the half year to March 31 was down from £71.6m last time, as turnover also fell by 1% to £950m and its debts leapt by £48m to £923m. The main reasons for the rise are said to be the net cost of acquisitions of £86m, the largest being the £45m purchase of Loot.
The company said the downturn's impact on the financial institutions contributed to the continued fall in recruitment advertising volumes. This hit its titles with a stronger reliance on financial advertising, such as The Mail on Sunday and its Euromoney publications, as well as those more dependent upon recruitment advertising, like the Evening Standard and certain Northcliffe regional titles.
In a statement, the company said: "There were buoyant advertising revenues in March, but this has not continued. April proved to be a tough market for advertising, although May looks more encouraging. Generally, the advertising market remains volatile and consistent improvement is still awaited."
However, the stronger consumer market has seen its retail-led Daily Mail and DMG World Media less affected. Turnover at its newspaper division fell by 2% with the effect of cover-price increases partly compensating for lower advertising revenues. Lower newsprint consumption due to fewer advertising pages, allied to active cost control, outweighed the balance of the fall in turnover.
The company said advertising revenues for the half year fell by 15% in total, but the impact was mixed across Associated's publications. Display advertising was down nearly 13% at the Daily Mail, largely due to lower financial and IT volumes.
The Daily Mail's major retail advertising market, DGMT said, held up well. The Evening Standard suffered from a 44% fall in recruitment advertising and from the general weakness of the London advertising market. Although affected by the weak advertising market, Metro continued to increase advertising revenues and, with reduced costs, recorded a profit in March.
Profits at its Northcliffe regional newspaper operation fell by 13% to £40.2m on turnover unchanged at £233m. Modest increases in advertising and circulation revenues were offset by a planned investment in editorial and marketing and by a reduced level of contract printing revenue. To revive its daily circulation, Northcliffe has invested £3m in additional marketing and improved editorial.
Its Euromoney financial publications, it said, have already reported encouraging first-half results. Although turnover fell by 11% to £89m, adjusted operating profit at £13.3m was only 5% lower than 2001, while pre-tax profits were marginally higher.
DMGT's radio operations, DMG Radio Australia, continues to operate at a slight loss largely due to the launch costs of its metropolitan Nova FM stations in Sydney and Melbourne. Its Teletext revenues were 9% lower than last year, although operating profit fell by only £1m.
DMGT said its DMG World Media division produced a pleasing increase in adjusted operating profit before development costs. Its home interest exhibition sector produced a good result in the period, with the North American shows proving robust in a softening economy and enjoying an encouraging increase in attendance.
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