One of the UK’s biggest newspaper publishers has warned that newsprint inflation and reduced demand for advertising is knocking the industry as profits fell by almost a third.

Operating profits at Reach, which owns the Daily Mirror, Daily Express and a raft of regional titles, fell by 31.5% in the first half of 2022 compared to the same period last year, down from £68.9 million to £47.5 million.

Revenue also dropped slightly, falling 1.6% from £302.3 million to £297.4 million and with print revenue down 3.9%.

Bosses said rising energy prices are fuelling all-time high newsprint costs and said the outlook for the second half of the year is just as bleak.

They also said that the fall in advertising revenue, by 9.9%, is partly driven by the war in Ukraine which exacerbated a slowdown in demand for brand advertisements.

Shares plummeted by more than 27% on Tuesday morning following the company’s results.

But Reach said it is continuing to invest in its digital services which is the future of the business, with digital revenue seeing a 5.2% increase in the first half of the year.

Reach’s chief executive, Jim Mullen, said: “While the macro-environment is naturally presenting challenges, we’re committed to investing in the data and digital capabilities that are shaping the future of our business.

“We have acted swiftly to address the headwinds facing the business and expect the further cost efficiencies and cover price increases to mitigate the impact of newsprint inflation and reduced advertiser demand which are affecting the whole sector.”

The publisher said the high cost of news printing is unprecedented, reaching around 65% higher on a like-for-like volume basis.

It comes as Reach came under threat of strike action earlier In July after staff and union members rejected a proposed 3% pay rise citing the soaring cost of living.

The National Union of Journalists notified Reach that it will ballot its members in the first time members across the whole company will vote on strike action.