Profits at the Daily Mail have been hit by the downturn in advertising.

And the newspaper group has warned that an improvement during the rest of the year is unlikely.

Daily Mail and General Trust said on Thursday its profits for the six months to the end of March fell to �65.2m ($95.3m), 9% down on the same period one year earlier.

In its Associated Newspapers group - which includes the Daily Mail, Mail on Sunday and London's Evening Standard - advertising revenues fell 15%.

Local spending strong

The company said that small rises in spending on retail, travel and car advertising were outweighed by falls in spending on recruitment and IT.

Generally the advertising market remains volatile

Daily Mail

In a statement the company said: "The downturn has been felt most by financial institutions and least in consumer markets.

"This has contributed to the continued fall in recruitment advertising volumes, especially in financial centres like London,"

But the group's local newspapers business, Northcliffe Newspapers, posted a 1.6% rise in advertising revenue thanks largely to an increase in property and car advertising.

World Cup

Throughout the advertising downturn, media companies have reported that national spending has been weak, while local spending has strengthened.

But the group said: "Generally the advertising market remains volatile".

"We still see no reason for any substantial improvement in advertising revenues over the rest of 2002."

The broadcasting companies, Granada and Carlton, sounded a more positive note about advertising this week.

They said the World Cup had helped boost TV advertising, and they saw the improvement continuing beyond June.

Price cuts

The Daily Mail is also facing a price war between two of its tabloid rivals.

But it said the newspaper, Britain's second biggest-selling daily, had seen minimal impact so far from recent cover price reductions by the Sun and Mirror.

Both titles are selling for 20 pence, while the Daily Mail costs 40p.