A “challenging advertising environment” has cost Trinity Mirror millions of pounds, with pre-tax profit falling 12.8 per cent to £98.1m.

The £14.4m hit for the first six months of this year, compared with the same period of 2005, is due to poor advertising, the company said today. Revenue fell by 2.2 per cent to £566.6m.

The company managed £9m in cost savings through the “Stabilise, Revitalise, Grow” initiative during that time and is on target to achieve at least £15m for the year.

A new review of the company has been launched, looking at operating models and structure to find the best way to take the group forward and to “capture opportunities”.

Chief executive Sly Bailey said in a report to shareholders: “Looking forward it is clear that continued change in the media market will create increasing challenges for the group in continuing to build on this progress.”

She added: “Our results should be viewed in the context of a weak advertising environment with falling GDP growth, sluggish consumer spending and rising unemployment.

“These market conditions are impacting all advertising categories with the exception of property advertising, where we continue to achieve marginal growth despite very tough comparables for 2005.”

Trinity Mirror’s regionals division publishes some 240 local and regional newspapers across the UK.

The division’s operating profit fell by £12.2m (15.5 per cent), despite a £4.1m increase in revenue, mainly due to acquisitions, such as hotgroup, GAAPweb, Smartnewhomes, Secsinthecity and Email4Property. Excluding the acquisitions, revenue for the regionals fell by £21.5m (7.8 per cent) from £277.3m to £255.8m and operating profit decreased by £14.6m (18.5 per cent) from £78.8m to £64.2m.

The chief executive’s report said: “Our regionals division has faced an increasingly difficult advertising environment in all advertising categories, with the exception of property, recording year-on-year declines.

“Despite these challenges we have continued to drive operating efficiencies to partially mitigate the impact on profits.

“While circulation volumes for our regional newspapers remain challenging, revenues continue to increase.

“The exceptions are our titles in the midlands. The new management team appointed to the midlands in 2005 is starting to make inroads into improving performance.”

Trinity Mirror regionals has continued to add to its portfolio, with the launch of 227 websites covering property and motors, and five newspaper titles including Metros in Cardiff and Liverpool.

The regionals’ digital media activities, excluding acquisitions, saw revenues increasing by 9.8 per cent and operating profits increasing by 88.9 per cent.

The newspaper titles are expected to reach profit in the first full year, while the websites have minimal impact in terms of costs.

All the new launch activity has been funded through cost savings, which reached £6.9m for the regionals division.

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