Publisher Daily Mail & General Trust
The company, which has diversified by buying dozens of small online and business to business companies, said on Thursday that ad revenue for its Associated Newspapers unit was down 6 percent for the 11 months to August excluding acquisitions and circulation revenue was up 1.6 percent.
Overall, despite the weakness of consumer advertising markets, the launch costs of our new London free newspaper and the impact of the weaker U.S. dollar, we still expect to achieve modest progress for the full financial year compared to last year, the company said in a statement.
After a difficult July and August for advertising, prospects may be on the uptick, however, for the publisher of the Daily Mail and Mail on Sunday, and the Evening Standard.
September's looking a bit better and we look to be outperforming our peers by a narrow margin, Finance Director Peter Williams told reporters.
Daily Mail shares were down 0.9 percent at 08:50 GMT (9:50 a.m. British time) to 582 1/2 pence.
The shares continue to look good value, with around 12 percent upside to our 660 pence target price, Panmure Gordon analyst Alex DeGroote said in a note following the trading update.
The publisher has engaged in a cut throat afternoon freesheet war with Rupert Murdoch's News International, pitting its London Lite against thelondonpaper for commuters.
About 390,000 copies of London Lite are being distributed, just short of the company's 400,000 target, Williams said.
We don't see this as being enormously expensive for us, he said, rejecting some of the cost estimates issued by analysts but declining to provide any specific figures.
Williams added that he expects the Evening Standard to return to profitability as it becomes differentiated as a premium product in the afternoon market with a higher cover price. There are no plans to fold it either, he said.
Underlying ad revenue from Daily Mail & General Trust's digital operations, excluding recent acquisitions, gained 22 percent year on year. The company derives about half its profit from non newspaper activities.
Advertising revenue at its regional publishing division, Northcliffe Newspapers, fell 8 percent over the same 11 month period, with the recruitment and auto categories suffering 17 percent drops.
Circulation revenue at the regionals was down 0.9 percent in the 11 months.
Daily Mail said it would report exceptional gains of about 180 million pounds in its annual results mainly from selling Aberdeen Journals and Study Group. Another exceptional gain of 20 million pounds will be posted due to the sale of its remaining shares in Reuters Group
The publisher added that because of changes to its adjusted tax charge its 2006 adjusted earnings per share increased to 18.7 pence from 17.8 pence.
The company's financial year ends October 1 and it plans to announce preliminary results on November 23.