Credit Crunch Bites Trinity Mirror, Profits Will Be Down 10 Percent

Trinity Mirror (LSE: TNI) suggests digital is the only glimmer of hope in what was a “marked” slump in ad revenues during May and June – a decline it says will continue for the rest of the year.

In a trading statement for the last half-year, ahead of the full July 31 results, the and Wales Online publisher said full-year operating profit will be a whole 10 percent below target. The economy is clearly now worsening, and faster than many had expected.

The ad market has “deteriorated, reflecting the uncertain outlook for the UK economy with the ongoing adverse implications of inflationary cost pressures and the wider implications of the credit crunch”. Trinity is shelving £67 million of its planned £175 million share buy-back scheme as a result. “Month-on-month volatility remains and this could worsen as we trade through a very uncertain economic outlook.” The most troublesome sector is property, where classifieds will be down 17.1 percent in the regionals division.

Trinity said online revenue grew 24.4 percent on an underlying basis, though (18.3 percent in regionals). It said its digital investments were bearing fruit and that it would continue to invest in that area. It’s on track to make at least £20 million savings by year’s end.