David Montgomery’s march across Europe was held up yesterday after his Mecom newspaper group was forced to admit that a freesheet war in Denmark meant that profits there would fall short of company targets.

The shares fell 4.8 per cent to 80p, although the Northern European publisher produced a faster profit growth in other countries to offset the problems in Denmark, at present the largest of the five countries in which Mecom operates.

Mr Montgomery, the former chief executive of the Mirror Group, said: “What we’ve seen is the emergence of two new free newspapers in the market, taking the total to four, and a property market which has gone soft. But the group as a whole remains pretty much on target.”

Operating profits in Denmark did improve marginally from £6.4 million to £6.8 million, but the company was hit with an exceptional charge of £14.8 million, principally from the decision by Mecom to close one of its two freesheets in Denmark, the home-distributed Dato, as competition by new entrants from Jyllands-Posten, of Denmark, and Dagsbrun, of Iceland, emerged.

Analysts estimate that the two titles have already lost around £60 million as they try to break in.

Mecom has been built rapidly by Mr Montgomery over the past 18 months through a string of acquisitions.

The strategy is to take the British model of building a regional newspaper group and apply it in Europe, where, in theory, margins can be improved and growth opportunities are greater.

After a series of transactions, the AIM-listed group has a market value of £1.2 billion.

Mr Montgomery promised a slowdown in the rate of acquistions once the company completes the €790 million (£538 million) purchase of Wegener, a Dutch regional publisher.

Mecom is close to raising its shareholding in Wegener to 40 per cent and has the backing of Wegener’s management, who hold a further 17 per cent.

Mecom’s group interim revenues for the six months to June 30 totalled £415.8 million, up 0.6 per cent on a like-for-like basis. Losses, after exceptionals, totalled £26.5 million, but underlying operating profit was £28 million, 31.5 per cent up.

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