The combination of the smoking ban, dwindling consumer confidence, rising costs and cheap supermarket beer has proved to be a lethal cocktail for pub companies over the past 12 months. Throw in underlying social factors such as the decline of heavy industry, the inexorable rise of in-home entertainment and public antipathy towards drink-driving and one could be forgiven for thinking that the British pub is in its death throes.

Recent statistics make grim reading. In April, a Morning Advertiser survey found that 69 per cent of pubs had suffered a fall in profits and 10 per cent were running at a loss. In May, the British Beer & Pub Association said that pubs were closing their doors at the rate of four a day, adding: “Many villages across Britain face a pub-less future.”

Yesterday, it was the turn of Mark Brumby, leisure analyst for Blue Oar Securities, who published a report suggesting that the average tenanted pub will suffer a fall in profits from £33,000 to only £3,260 next year, forcing the big companies that own the pubs to provide more support.

Although most of the companies have already launched beer discount and rent concession schemes, Mr Brumby suggests that in the case of Punch Taverns and Enterprise Inns, which between them own about half Britain’s 30,000 tenanted and leased pubs, such help could amount to £50 million to £60 million a year.

He says that although the passing of the anniversary of the smoking ban should make trading comparatives easier, the slowing economy, the “suicidal aggression” of supermarkets and rising commodity, food and utility prices have compounded “an already poisonous cocktail”. In something of an understatement, he concludes: “The data suggest that tenants will find themselves in something of a tight spot.”

Ted Tuppen, chief executive of Enterprise Inns, said that, as far as his company was concerned, the calculations understated the contribution of food sales, which were growing strongly, and overstated that of machine income, which was falling steeply. “The numbers would not stand analysis when applied to an estate of our quality,” he said.

He may be right, but there was no shortage of tenants, many of them angered by what they see as the rapacious attitude of the pub companies, lending support to Mr Brumby’s findings via internet chatrooms. Summing up the majority view, one tenant said: “So the City has finally seen what the tenants have known for months.”

Whether or not Mr Brumby’s figures are right, it cannot be denied that life for pub tenants is as tough as anyone can remember. But with shares of Punch and Enterprise having fallen by 84 per cent and 58 per cent respectively over the past 12 months, now is not the time to lose faith. Hold.

Thorntons

Shoppers may be thinking twice about buying a new coat or paying for a trip abroad, but when it comes to chocolate they can’t get enough. Thorntons, the chocolate retailer, showed yesterday that hard-up homeowners appear to be comfort-eating their way through the credit crunch.

While the rest of the high street faces up to the worst downturn for a decade, Thorntons reported total sales growth of 16.8 per cent for the ten weeks to June 28, with like-for-like growth at its stores of 3.6 per cent. Profits for the year to July are expected to be in line with market forecasts and Mike Davies, the chief executive, believes that momentum is growing. Mr Davies, a former Mars executive, has put more focus on innovation, with consumers now offered ice-creams such as Toffee Temptation alongside Thorntons Moments, a family pack of chocolates designed to cash in on the success of rival products such as Celebrations or Cadbury’s Heroes. The innovation continues next month when Thorntons tests a new format in Kingston upon Thames in London’s southwest suburbs, including an instore chocolatier and chocolate fountain. Shares in the retailer have underperformed the sector by 8 per cent in the past three months and were at their lowest levels for seven years a week ago. Yesterday Dresdner Kleinwort upgraded its targets for 2009. It may be jumping the gun, but Thorntons is worth keeping in the portfolio. Hold.

Salamander

In markets like these, raising money is no easy feat, so the Asia-focused oil group Salamander Energy deserves credit for pulling off a $200 million fundraising yesterday.

At 300p per new share – a 2 per cent discount to Tuesday’s closing price – the fundraising represents a vote of confidence in Salamander, which will use the cash to capitalise on the high oil price by accelerating its production in Thailand. It will also press on with exploratory drilling in Laos, Vietnam, Indonesia and the Philippines.

The company, which was formed in 2005 and listed at 250p in November 2006, observes an investment rule that many oil companies would do well to follow. It devotes 80 per cent of its capital to the development of existing fields and only 20 per cent to exploration.

The group is producing about 8,200 barrels per day from two established fields in Indonesia and Thailand, ensuring a reliable revenue stream as it embarks on riskier drilling elsewhere.

This disciplined approach has not yet been reflected in Salamander’s share price. Shareholders have enjoyed a modest gain since the IPO – investors would have had better luck investing in a barrel of oil. With a busy drilling programme over the next few months, there is plenty of scope for further gains, making Salamander a cautious buy at 285p.

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