NEWSAGENT and distribution group WH Smith posted a slump in half-year profits after being dragged down by tough trading in the US.

The group, which operates shops in hotels and airports in the US, has been rocked by the country's economic slowdown.

It has also been affected by the terrorist attacks of September 11 and the subsequent slump in tourism, as airline passenger numbers and hotel occupancy rates dwindled.

The group's US division fell into the red for the six months to February 28, with operating losses at £12m, compared with profits of £6m last year. Sales slumped 12 per cent, to £100m, and by 18 per cent on a like-for-like basis.

Chief executive Richard Handover said: "Trading in the US travel retail business continues to be difficult following the September 11 terrorist attacks, although sales trends are gradually improving."

WH Smith is seeking to cut costs in the arm, and measures include closing hotel-based stores and reducing central costs.

The poor performance in the US came despite "satisfactory" trading elsewhere in the group. UK retail sales rose eight per cent at £868m, or six per cent on a like-for-like basis, with its high street and travel operations also reporting growth.

News distribution saw sales jump from £507m last year to £538m, driven by newspaper price increases and a surge in volumes.

Newspaper sales rose 11 per cent, while magazine sales were three per cent ahead, but in its publishing arm profits were flat at £9m.

Overall, WH Smiths reported an increase in interim group sales, from £1.44bn to £1.58bn. Pre-tax profits slid from £100m to £63m.

Shareholders will receive an interim dividend of 6p per share, the same as last year.