Enterprise Inns predicts more gloom

Pub companies are experiencing one of their toughest periods for many years and face possibly two more years of declining consumer demand, according to the head of one of the biggest groups in the UK.

Ted Tuppen, chief executive of Enterprise Inns, said the smoking ban and weak consumer confidence would make the market difficult for the foreseeable future.

“We are in the middle of one of the most difficult six-month periods the pub industry has experienced for a long time,” he said.

Punch Taverns, the UK’s biggest pub operator, on Wednesday also reported slowing demand, while other pub groups are expected to offer a similarly sombre picture in the next few weeks.

Mr Tuppen said it would take until the second half before comparables became easier and pressures caused by the smoking ban eased. He added: “However, I see consumer weakness for a year or two.”

Enterprise, whose 7,700 pubs are leased to tenant landlords, released a trading statement for the 15 weeks to January 12, saying earnings before income tax, depreciation and amortisation was broadly the same as the equivalent period last year, and earnings per share were ahead.

It added that its business model remained robust, despite difficult trading conditions. Its churn of pubs in recent years and its investment in an offering less dependent on beer protected its licensees from declining beer sales, which sector data said had fallen 9 per cent in October and November.

Enterprise, whose market capitalisation is £2bn ($3.9bn), bought 26 pubs in the 15 week period, has exchanged on a further six and invested £24m in the estate. It sold 10 and put 96 on the market in November for alternative use. The company said it continued to offer concessions and discount schemes to struggling licensees.

Enterprise added that it remained in talks with HM Revenue & Customs over potential conversion to real estate investment trust status, and was considering internal restructuring.

Shares in Enterprise, which fell 28 per cent in 2007, rose 12¾p to 416p.