Shares in Australia's APN News & Media, which is 45 per cent owned by Independent Newspapers, fell to a seven-month low after the company reported weak advertising conditions in two of its divisions.

Although APN, which is Australia's fifth-largest media group, posted a 63 per cent increase in net profits to Aus$36 million (€20.04 million), much of the rise was due to the first-time inclusion of Wilson & Horton.

Half-year earnings would have been down slightly without the inclusion of the New Zealand publisher, acquired last December for $1.2 billion.

This lent support to APN's publishing division where revenues rose by 2.8 per cent to $301.3 million. But the company's two other divisions, broadcasting and outdoor advertising, did not perform as well. Softer advertising expenditure across the Australian radio market led to a 5.2 per cent drop to $89 million in broadcasting revenue, while turnover in the outdoor division fell by 4.8 per cent to $82.1 million.

Following the results, APN shares fell by 6 per cent to $3.38 in Sydney, their lowest level since January, although the company said it believed it could still meet net profit expectations of $92.5 million this year.

"Assuming the expected upturn in the advertising market and the continuation of operational improvements over the remainder of the year, profit forecasts for the full year remain achievable," APN said.

But Merrion Stockbrokers noted that given flat first-half earnings of 8.4 cents, APN would need second-half earnings to improve by around 16 per cent to achieve full-year consensus estimates of 20.7 cents.

"We would view this as a stretch and indeed our current forecast of 8 per cent operating profit growth in the Australian/New Zealand contribution to Independent News & Media now also looks difficult to achieve," analyst Ms Niamh Brodie said.

However, Independent's chief operating officer, Mr Gavin O'Reilly, said he was comfortable with the forecasts, given the improvement seen in advertising in July and August.

Although there had not been an explosion in volume, he said the latest radio ratings had been very good while he described the yield from the outdoor division as "heartening"."We need an increasingly improving result toward the end of the year," he said.

Independent's shares were unchanged in Dublin at €1.65 yesterday.