And the group doesnt expect to see much of a recovery in the next six months, although it remains confident in the long term.

Sales for the half-year period to 1 February were up 3.3% to 241.1m because of St Ives acquisition of Avanti Press in February 2001, but managing director Brian Edwards said underlying sales were down 12%.

The group was also hit by exceptional charges of 9.4m, taking pre-tax profits, also accounting for goodwill, to 6.1m. The majority of the exceptional costs came from redundancies and the proposed closure of its Gillingham web offset plant, which had to be accounted for in this period.

The one bright spot for St Ives was its book printing operation, Clays, which benefited from printing best sellers related to film releases, including The Lord of the Rings and Harry Potter. Chairman Miles Emley said: This business is more resilient in challenging times and less scintillating in buoyant times than some of our others.

St Ives direct response businesses suffered from weak demand in the UK, US and Germany, although specialist products were more resilient. In the US it has consolidated some functions at its two South Florida sites although manufacturing remains at both plants.

Corporate financial activity was exceptionally quiet in Europe and the US, although St Ives maintained its share of the market as well as in report and accounts, most of which occurs in the second half of its financial year.

The groups magazines business was hit by falling advertising, particularly in the travel, leisure and dotcom sectors, but fashion and lifestyle titles held up and circulation has generally been stable.
However, title closures have prompted its plans to close Gillingham and consolidate magazine printing at its five other UK web offset plants.

In multimedia, demand deteriorated and prices were under pressure, while Emley said the DVD market was not at commercially significant levels.
There is much talk about it and percentage growth is very high but from zero to one isnt very much, he added.

The UK accounted for 63% of group sales, with the US at 32% and the Dutch and German operations at 5%.

St Ives cut, or proposed to cut, 625 jobs in the period, leaving its total workforce down 11% on the same time last year.

Its net capital expenditure was 16.67m, which included the new Displaycraft site at Crayford and the MAN Roland Rotoman for Edenbridge. The group now has Creo CTP systems at four of its web plants, with just Peterborough remaining.

The National Insurance reforms announced in last weeks Budget will add around 1.25m to St Ives bill. Another friendly policy to manufacturing, said Edwards.

St Ives share price fell 3.8%, or 17.5p, to 442.5p on the results.