City AM, the London financial freesheet, made its first profit in the six months to March, raising expectations of an eventual sale of the title.

The company behind the weekday paper earned £47,000 in the period before interest and tax on advertising revenues of £3.5 million. Revenues were 45 per cent ahead of last year, when the loss was £754,000.

Jens Torpe, the City AM publisher, said that he hoped to expand and improve profits before considering a sale. “We're hoping to progress further,” he said. “On the figures we think we can achieve, we will be much more valuable in the next two to three years”.

He hopes to expand circulation beyond its 101,700 to 150,000, mainly through broader distribution in London, concentrating on areas such as Mayfair, where venture capitalists and hedge funds work, and Victoria. Costs have been cut by reducing the number of hand distributors from about 200 to 115. City AM is considering taking on a second city, distributing an extra 15,000 to 20,000 copies. Mr Torpe said: “We'll decide in the next few months whether to launch in the autumn, but for the moment the [overall economic] outlook does seem to be worsening.”

Mr Torpe and Lawson Muncaster founded City AM in September 2005, after they left Metro, the Swedish freesheet group. They were backed to the tune of “between five and ten million” in the form of a shareholder loan from three Dutch and Russian investors, who, through their Blue Bull vehicle, own half the company. Mr Torpe and Mr Muncaster own the other half.

One of the three founding investors - Leonid Rozhetskin - went missing in March from his holiday home in Latvia. His shares are being held in trust by the other members of the Blue Bull group - Derk Sauer, a founder of The Moscow Times, and Boudewijn Poelmann. Mr Torpe said that, to his knowledge, Mr Rozhetskin's stock was not for sale.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange