Despite the fall in profits and a warning from Trinity Mirror chairman Sir Victor Blank that the outlook remained uncertain, its shares were up this morning, rising 2.3% to 376p.
Interim operating profits in the six months to June 30 fell to £95.9m, down from £100.5m last year, as the group invested £6.5m in marketing, most of which is thought to have been spent on its costly price-cutting war with The Sun.
Its said the cover-price cuts had achieved results that were in line with its expectations. The group said the fall in the national newspapers operating profits was a reflection of the difficult advertising market, which saw a 8.4% decline in advertising revenues.
On the fall in advertising revenues, Trinity Mirror chief executive Philip Graf said: "On the nationals we're down about just over 8%. Of course, the nationals have seen some real improvement in growth in May and June helped by the World Cup and we continue to see some growth into July on the national side of the business, and the regionals were down to just over 2%."
Profits before tax and before exceptional items declined by 2.7% to £78.4m. Trinity said this decline reflected the reduction in operating profit of 4.6%, partially offset by a £1.9m reduction in financing costs.
Trinity's digital media operations saw revenues halved, falling to £0.3m, and reported a loss of £4.4m.
Sir Victor commented: "The immediate future of the marketplace remains uncertain. However, we continue the successful implementation of the group's strategy and this underpins the board's expectation of a satisfactory outcome for the year."
Revenues fell by 3.6% to £554.8m, down from £575.6m last time, reflecting an overall fall of 4% in advertising revenues to £312.9m. This also included a 1.3% decline in circulation revenue to £191.1m.
It said that research undertaken last year indicated that there was an opportunity, over the medium to long term, to increase frequency of purchase among existing Daily Mirror readers and to improve the title's share of young people entering the tabloid market.
Trinity said it delivered £14.6m in cost savings and is on target to achieve £32m in the full year. It netted £16.7m from the sale of Sunday Business Post and Ethnic Media Group.
Earnings per share before exceptional items decreased by 5.2% from 19.4p to 18.4p, reflecting both the decline in profit before tax and the increase in the estimated effective tax rate from 30% in 2001 to 31.3% in 2002.
Advertising revenues within the regional newspaper operations declined 2.2% to £202.9m. Excluding Metros, advertising revenue declined by 2.5%. Outside London and the South East where advertising revenue fell by 12.6%, the division (excluding Metros) achieved growth of 1.8%.
Excluding the Metros, recruitment advertising was the key driver of the decline in advertising revenues, with a 5.4% fall to £63.3m.
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