Daily Mail owner sees lower profit

The owner of the Daily Mail today warned weak advertising and circulation revenues would leave operating profits lower than a year ago.

Daily Mail and General Trust, which also owns the Mail on Sunday and more than 100 regional titles, said its consumer division saw a 3% dip in revenues, including a 1% fall in advertising sales, in the 11 months to the end of August.

Chief executive Martin Morgan said: “Despite our continued focus on operational efficiency, the weak consumer advertising environment means that full year group operating profit will be lower than last year.”

However, revenues from the group’s business-to-business operations, which include publications such as Euromoney Institutional Investor and marketing arm DMG Events, were up 8%, helping lift overall group revenues in the period by 1%.

Analysts expect full-year operating profits of £293m (€336m) for the year to September, compared to £303 million last year.

DMGT increased the weekday cost of the Daily Mail in July by 5p to 55p in a bid to offset the continuing high cost of newsprint – the first price hike since April 2008.

The group said circulation revenues were weak due to the temporary impact of promotional price reductions over the late summer at the Mail on Sunday.

Local newspapers have suffered falling circulation and advertising revenues in recent years following competition from the internet, with fellow regional publishers Johnston Press and Trinity Mirror having both posted gloomy updates earlier this year.

DMGT said conditions at its consumer division, which includes newspapers, had been “tough” as weaker ad and circulation revenues combined with a high cost of newsprint.

The two largest advertising categories, retail and travel, were weak in the period, both down 5%, DMGT said.

The Mail on Sunday newspaper last month became the top-selling Sunday newspaper in the UK after the closure of the News of the World following the phone-hacking scandal. The Mail on Sunday’s circulation increased 15% to 2,255,399 in July from 1,954,616 a year earlier, according to the Audit Bureau of Circulations.

However, the B2B division has continued to deliver revenue growth, with DMG Events posting 15% underlying sales growth, which was driven by the New York International Gift Fair, its largest ever event.

DMGT shares were up more than 4% following the trading update.

Jonathan Barrett, analyst at Singer Capital, said: “The consumer business is clearly seeing volatility in advertising with regionals still very weak and the nationals seeing significant volatility.”