Shares in Trinity Mirror fell 12 per cent on Thursday after the newspaper publisher said it remained cautious about the economic outlook and revealed that the decline in advertising at its regionals division had worsened in March and April.

Group revenue fell 5 per cent year-on-year, with advertising revenue down 5 per cent on a like-for-like basis in the 17 weeks to May 2.

Advertising revenue at Trinity Mirror’s regional newspapers fell 10 per cent in March and April, compared with a 6 per cent drop in January and February.

At the group’s national newspapers, advertising was flat year-on-year.

The company said the run-up to the general election had exacerbated “volatile” trading conditions. The Central Office of Information, the government’s advertising body, curtails its spending in the weeks between the announcement of the election and polling day, to maintain impartiality.

Group circulation revenue fell 6 per cent on a like-for-like basis. Taking into account the March acquisition of Guardian Media Group’s regionals division for £7.4m ($10.8m), group revenue fell 2 per cent.

The company said it expected the acquisition to become profitable during 2010 and that it was performing ahead of expectations. “The top line is marginally disappointing, and the potential for upgrades has shifted into 2011 rather than 2010,” said Dominic Buch, analyst at Numis.

“But the fact that the GMG acquisition is moving into profit should provide a bit of a cushion for this year’s forecasts,” he added.

Consensus forecasts for the full year are for adjusted profit of £85m, and earnings per share of 23.6p.

Net debt widened to £333m, from £324m at the beginning of January.

Trinity said it expected a reduction over the year.

The shares closed down 17.3p at 121.5p.

● FT Comment

After rebounding from their low of 19¾p in March 2009 to a high of 192p in October, shares in Trinity Mirror have recently trimmed their gains. Yesterday’s results knocked them further, leaving the stock trading on a 2010 price to earnings ratio of about 5 times. That’s a justified discount to the media sector average of 11, given the structural pressures weighing on the regional newspaper sector, and the worrying lack of visibility on the timing of any cyclical recovery.

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