Trinity Mirror warned of continuing gloom in the advertising market yesterday as Britain's largest newspaper group said its tabloid Mirror titles and regional publications faced a "difficult" end to 2005.
Advertising revenues at the group's national newspapers, which include the Daily Mirror and the People, fell 12% in July compared with the same month last year. Trinity Mirror's regional division, home to more than 250 titles, suffered a 2.5% drop.
Sly Bailey, Trinity Mirror's chief executive, said two important categories - retail for the red tops and recruitment for the regionals - had been hit in recent months.
"Sluggish consumer spending and a difficult retail environment have fed through into our advertising categories, largely display in the nationals and recruitment in the regionals," she said.
Advertising accounts for about 57% of group revenues. This is broadly split between classified advertising (such as recruitment and small ads) at 27% of turnover and display, and large bookings (such as from retailers and telecoms operators) at 30%.
Vijay Vaghela, finance director, said the group would "probably see the current conditions continuing" for the rest of the year, although he expected the business to hold its share of national advertising and perform in line with the regional advertising market.
Signs of the downturn were also evident in Trinity Mirror's first-half results, published yesterday. Headline figures were in line with expectations, as pre-tax profits for the six months to July 3 rose 15% to £113.2m, on revenues of £579.3m, up 1.2%.
However, the national division, which has suffered continuing sales declines along with many of its industry peers, saw advertising revenues fall a "substantial" 5.4% to £99m over the period as total turnover slipped 1% to £255.5m. The regionals operation fared better, as advertising sales rose 1.5% to £214m for the whole period, but decreased in May and June. Total turnover for the division grew 2.6% to £277.3m.
Trinity Mirror's downbeat prognosis follows similar announcements from rivals. Daily Mail & General Trust, owner of the Daily Mail and 100 regional newspapers, said in April that the market had "softened considerably". Commercial radio has suffered the worst, with GCap Media, the industry leader, reporting a 14% revenue drop in May amid a "pretty grim" trading environment.
Ms Bailey sought to portray the advertising outlook as a blip that would not block progress in the final phase of the group's "stabilise, revitalise, grow" strategy. Trinity Mirror has about £1bn available for acquisitions and is interested in buying Hotgroup, the online recruitment site, and is tipped to bid for Auto Exchange, the classified car magazine recently put up for sale by United Business Media.
Ms Bailey declined to comment on possible acquisitions or on a reported failed bid for the Mirror titles by the entrepreneur Marcus Evans but said further online expansion was inevitable. "In the future we will see ourselves as much as an online publisher as a print publisher, because that's where our readers and advertisers will be," she said.
Trinity Mirror added that it would invest £83m in upgrading its printing plants, ensuring that its national titles and some regionals print in full colour by 2008.
DMGT recently announced a £100m full-colour printing programme and Rupert Murdoch's News International, owner of the Sun and the Times, is closing down its Wapping site to set up three plants at a cost of £600m.
The Guardian and Observer have also invested £50m in full-colour printing presses as both newspapers prepare to switch to the Berliner format.
Trinity Mirror shares were unchanged at 605.5p.
