London, Jan. 17 - Enterprise Inns, Britain's second biggest pub operator, warned on Thursday that pub firms are likely to face a tough year ahead as consumer spending worries and the impact of last year's smoking ban take their toll.
"This half through to March is going to be very tough because you have got the full effect of the smoking ban in the winter combined with consumer confidence at the lowest point for quite a long time," Chief Executive Ted Tuppen told Reuters.
Enterprise is the second pub firm in two days to warn of subdued spending by drinkers as the industry struggles to cope with consumer concerns and the smoking ban.
Larger rival Punch's shares fell to a three-year low on Wednesday after it reported falling sales and issued a wary outlook.
Despite the woes Tuppen, said things should start to improve.
"I think that the six months that we are in the middle of is about as difficult as it's going to get ... Christmas was not as good as last year but it certainly hasn't been a disaster."
He said earnings before interest, tax, depreciation and amortisation (EBITDA) in 15 weeks to Jan. 12 was broadly in line with the same period last year and earnings per share were ahead.
Analysts expect most pub companies to report flat or falling EBITDA in the first half of 2008 but predict second-half growth thanks to weak trading last summer when torrential downpours deterred pubgoers.
Enterprise shares rose as much as 6.5 percent in early trading as analysts breathed a sigh of relief that the tone was not as downbeat as Punch's.
By 0900 GMT, shares settled 4.5 percent higher at 420 pence with the rest of the sector also recovering some of Wednesday's Punch-related losses.
DRINKING PROBLEM
Tuppen said although the smoking ban was hitting bar sales, the decline was not as pronounced as the 9 percent November drop reported by the beer industry.
"Because we've got a good estate we are not as bad as the market."
With its pub landlords facing tough trading conditions, Enterprise said it was offering rent concessions, discount schemes and trading support.
Long running talks with Britain's Treasury about the firm qualifying for low-tax REIT status are continuing, Tuppen said.
"Our advisers remain confident that they have developed a structure that should satisfy the REIT criteria for HMRC."
He added it was also mulling refinancing a securitisation and was continuing to buy back shares, although with the debt markets still in trouble, analysts at Deutsche Bank cut their buyback predictions for 2008 and 2009 from 300 million pounds ($589 million) to 100 million a year.