Greene King, the brewer and pub operator that sponsors England rugby, said this morning that it was maintaining its interim dividend despite warning of a worsening economic climate in 2009.

The company, which operates 2,500 pubs in England and Scotland and brews Abbot Ale and Old Speckled Hen, said pre-tax profits for the 24 weeks to October 19 fell from £71.6 million last year to £60.7 million, while revenues were broadly flat at £445.5 million.

However, unlike Mitchells & Butlers and Punch Taverns, which have both scrapped their dividends, Greene King said that it will maintain its shareholder payout at 7.3p after comfortably meeting its debt obligations.

Since the end of the full-year, Greene King has reduced its debt by £14 million to £1.5 billion, and has restructured its borrowings so there is no debt refinancing requirement until 2012.

Rooney Anand, chief executive of Greene King, said that the company had a strong balance sheet and was throwing off sufficient cash to continue investing in its pubs while paying a dividend. "It's a pretty old-fashioned idea," he quipped.

But Mr Anand conceded that trading conditions in Britain's pub trade were “the toughest for a long time”.

He blamed a weakening of consumer confidence resulting from the credit crunch as well as heavier discounting by off-licenses and supermarkets, which has encouraged consumers to stay at home.

Mr Anand also said that higher costs, including fuel, energy and the raw materials needed for brewing beer, had placed the group’s profit margins under “severe strain”.

“I believe the environment will become even more challenging in the near-term as we are yet to see the full impact on discretionary spend of rising unemployment, increasing negative housing equity and continued high consumer debt levels,” Mr Anand said.

He said he was not surprised at the deterioration in the economic backdrop, as he had been predicting as much for 18 months. "I've been called the gloomiest chief executive in the sector for a year and a half. I used to take offence but now I think it's a compliment."

Its managed pub division reported a 1.6 per cent decline in like-for-like sales in the first half, widening to 2 per cent for the first 30 weeks, which Mr Anand described as a robust performance given the trading climate.

He said that Christmas bookings were looking reasonably positive, and suggested that some consumers may have been holding back in November in order to have cash to spend during December.

Mr Anand said that while value for money food-based concepts such as the Hungry Horse chain were doing well, trading in the the company's drink-led local pubs, which had been hardest hit by the smoking ban, had started to stabilise.

He said the screening of sports events had helped such "wet-led" community pubs, but said they were also benefiting from a shift away from "a hooley in town involving a taxi ride home".

"I have a feeling that the sense of community will become more important in these times. When you feel a bit more insecure, you seek the solace of family and friends."

Shares of Greene King fell by 33p - or 8.6 per cent - to 350.5p in afternoon trading.

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