May 26, 2011 / 6:32 AM / 6 years ago

UPDATE 2-Daily Mail H1 in line, shares fall on outlook

3 Min Read

* H1 sales 991 million pounds, operating profit 144 mln

* UK consumer ad sales fall in April, May; outlook uncertain

* Shares fall 4.5 percent, brokerages cut target price

(Adds shares, CFO, analyst comments, details, background)

By Georgina Prodhan

LONDON, May 26 (Reuters) - British media group Daily Mail & General Trust (DMGOa.L) said advertising revenue from domestic consumer operations fell in April and May despite market-share gains and operating efficiencies, sending its shares down.

The company said on Thursday it still expected to achieve overall growth for its the year to end-September, buoyed by business-to-business operations which include financial information, risk-management services and events.

New Chief Financial Officer Stephen Daintith told reporters he expected the full year to broadly reflect the revenue growth and profit margins of the first half.

But Daily Mail shares fell as much as 6.5 percent as the market focused on the company's cautious tone on the outlook. By 0740 GMT, they had pared losses to trade down 4.5 percent at 462.8 pence.

The shares had already fallen 16 percent this year so far, underperforming the wider European media market .SXMP.

"Despite continuing momentum within our B2B operations, we remain cautious about the outlook for the full year due to the volatile and uncertain market conditions faced by our UK consumer businesses," chief executive Martin Morgan said.

London brokerage Numis cut its target price to 650 pence from 725 pence, and Panmure cut its target to 625 pence from 725 pence, although both kept their "buy" recommendation as the company's portfolio of assets is considered strong.

"Despite the revenue pressure in B2C, we retain our long-term positive stance on DMGT," Numis analysts wrote.

First-half results were in line with expectations, with a 3 percent increase in revenue and an 8 percent increase in operating profit. The company said it would raise its interim dividend 6 percent to 5.3 pence.

Sales were 991 million pounds ($1.6 billion), while operating profit was 144 million. Analysts had expected revenue of 991 million pounds and operating profit of 143 million, according to Thomson Reuters StarMine SmartEstimates.

Daily Mail's B2B sales grew 9 percent on an underlying basis and were boosted by a strong performance in events, which benefited from the timing of two large biennial trade fairs and solid growth at the New York International Gift Fair.

Revenues from national newspapers, which include the best-selling mid-market tabloid the Daily Mail, fell 3 percent but adjusted operating profit rose 5 percent as the company cut costs and headcount.

At the regional newspapers, underlying revenues fell 9 percent as an advertising decline accelerated -- with a shortage of recruitment ads in a weak economy. Operating profit fell 35 percent despite an 11 percent headcount reduction. (Reporting by Georgina Prodhan; Editing by Dan Lalor and David Cowell) ($1 = 0.6162 pound)

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