Mecom, the European newspaper business run by former Mirror Group boss David Montgomery, has posted a 3% fall in like-for-like group operating profit for the first half of 2008.

Group operating profit at Mecom, which owns papers in five European countries, was £64m for the first six months this year, a fall of 3% on the same period in 2007.

Advertising revenue was down 2% to £401m, while revenue from circulation was up 3% to £261m.

Digital revenue, from more than 200 Mecom-owned websites, was up 36% year on year on a like-for-like basis to £32m. Digital now accounts for 4% of group revenue.

The acquisitions of German publisher Berliner Verlag and Dutch group Wegener helped revenues surge 354% to £770m. However, on a like-for-like basis revenue was flat year on year.

"The combined businesses are performing well togther in the face of a less favourable economic climate and our newspapers remain stable and robust franchises," said the Mecom executive chairman, David Motngomery. "Cost management and business restructuring will continue to play a fundamental part in countering advertising decline."

He added that Mecom's focus was to "increase momentum" towards a "fully fledged content and consumer business" that generated more revenue from each customer than "solely the price of a newspaper or a single advertisement".

Mecom's pre-tax loss narrowed slightly, from £24.6m to £19.7m, while the company's net loss grew slightly year on year from £17m to £18m.

Mecom said that the advertising decline was mainly due to the significant economic downturn and a freesheet war in Denmark and "some softness" in the German advertising market, particularly in some categories of display ads.

The company reported that display advertising was flat for the period at £230m, while classified advertising was down 4% to £171m year on year.

Mecom said circulation revenue grew by 3%, despite falling sales, due to cover price increases supported by "product enhancements and relaunches".

"The business mix of European newspapers with less dependence on classified advertising and a higher proportion of subscription revenues results in Mecom being less exposed to advertising decline than UK-only newspaper companies," the company added.

The company said that its aim was for digital to account for 10% of group newspaper ad revenues by the end of next year.

Looking ahead, Mecom said that "assuming there is no significant adverse change in our markets we expect a similar performance in the second half".

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