Intense competition in Denmark's newspaper market prompted a 63 per cent slump in operating profits in the country for Mecom, the Northern European newspaper group run by David Montgomery.

Income in the first half of the year fell by £5 million to £3 million, after advertising revenues fell 13 per cent at a time when the economy was faltering amid a four-way freesheet battle that Mecom described as "unsustainable".

Denmark, where the company is the largest newspaper publisher with 35 per cent of the market, represents Mecom's second biggest market after the Netherlands; the group also owns titles in Norway, Germany and Poland.

The soft performance in Denmark held back the group's performance. Like-for-like sales were marginally up at £770 million while adjusted operating profit before exceptional items and acquisition-related depreciation fell 3 per cent at £64 million.

Worries about the faltering European economy, the impact of rising inflation, and the battle in Denmark prompted some analysts to trim their forecasts. Cazenove, the broker, cut its earnings target by 8 per cent in 2008 and 7 per cent in 2009.

Profits were 15 per cent up in Norway to £16 million, where the company received an approach to buy its titles in July.

However, the group did not provide further detail about the potential transaction and it reported a lower-than-expected debt figure of £546 million, implying that it was not under pressure to make a sale.

Borrowings are just over 3 times underlying revenues — the ceiling required by the group's lenders is 3.75 times.

Mecom's operating profits were 8 per cent ahead in the Netherlands at £42 million, while in Germany, where it publishes regional daily Berliner Verlag, they were down 12 per cent at £7 million, and investment in Poland, home to its national title Rzeczpospolita, pushed income down £2 million to £1 million.

Overall pre-tax losses were £19.7 million, compared with £24.6 million a year ago, reflecting exceptional charges largely related to cost-saving initiatives. There is no dividend.

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