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November 11, 2010 9:46 am
Shares in Trinity Mirror fell almost 16 per cent on Thursday after the publisher of the Daily Mirror said a nascent recovery in its advertising revenues had stalled amid economic uncertainty and public sector cuts.
Advertising at the company’s national division, which grew 2.2 per cent in the first half, fell 1.3 per cent year-on-year in the third quarter to October 31.
The main driver of the decline was a weak September, when underlying group revenues fell 6.5 per cent, compared with a 5 per cent decline in the first half.
“There’s more caution and uncertainty about where the economy will end up,” said Vijay Vaghela, finance director.
“Retailers, in particular, were spending less money on advertising in September, and volumes at the nationals were generally down.”
Mr Vaghela said the rate of decline had moderated in October, but added that November was “too early to call”.
The results highlight the volatility in revenues facing newspaper publishers, as the government reduces its marketing and recruitment spend and companies take a cautious approach to advertising.
Overall, Trinity was able to report a 4 per cent rise in total revenue in the third quarter, thanks to the acquisition of Guardian Media Group’s regional titles.
Excluding the GMG titles, group revenue was down 5.4 per cent, with advertising turnover 4.6 per cent lower than in the same period a year ago.
Mr Vaghela said that a combination of the GMG regionals acquisition and cost savings meant the company still expected to meet analysts’ full-year forecasts for operating profit of £120m ($193m) and adjusted profit of £95m.
Contracted net debt – which takes into account cross-currency interest rate swaps on dollar denominated debt – was £288m at October 31, down from £308m at July 4.
Shares in Trinity Mirror fell 15.5 per cent, or 16¼p, to 88½p.
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