Punch Taverns, Britain’s largest pub company, announced today a 24 per cent decline in first-half profits as the smoking ban and a crash in consumer confidence kept drinkers at home.

The operator of 8,400 leased, tenanted and managed pubs said that like-for-like sales for its leased businesses were down by 2 per cent, with like-for-like sales of the core managed estate declining by 2.8 per cent.

Interim results showed that profits of £133 million, a 1 per cent increase since last year, were reduced by a £19.2 million loss on interest-rate swaps and a one-off redundancy charge of £5 million.

Punch said that the results reflected “challenging market conditions” pointing to falling consumer confidence.

It said that recent rises in household expenditure such as increases in food and fuel duty, and rising pressures on mortgage repayments, had impacted on the disposable income of its customers.

Punch also said that its profits had been hit by the smoking ban implemented in 2006, which had reduced beer sales over the winter months.

Speaking to The Times, Giles Thorley, chief executive of Punch Taverns, said: “We’ve had reasonably robust results despite the impact of the smoking ban.

“If you look at consumer-focused businesses, they’ve all got challenging trading circumstances. Pubs actually are relatively robust compared to other retail businesses.

"Having said that, we can’t ignore consumer confidence. If it’s low, that’s going to have an effect, and what I’m doing is setting expectations carefully.”

This month Mitchells & Butlers (M&B), the All Bar One and Toby Carvery operator, failed in its attempt to persuade Punch to sell Spirit Group, its £1 billion-plus managed pub division.

Mr Thorley said that the board had treated the offer from M&B “with disdain”.

“[M&B] issued a statement saying they would be interested [in buying Spirit],” he said. “It’s not for sale. That interest was only to deflect to our interest in their whole business.

"We treated it with disdain, really, and kind of ignored it and carried on with our business.”

Punch had approached M&B about a full merger of the companies, but withdrew the proposal later in February.

After M&B’s approach for Spirit was rejected this month, Punch said that it remained keen to purchase the division.

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