Solihull-based Enterprise Inns – Britain's second-biggest pubs group – has posted an 11 per cent fall in first-half profits, warning shareholders conditions are likely to stay tough as consumers cut spending.
"Trading conditions over six months have been the worst I can remember," said group chief executive Ted Tuppen.
The group said it had seen the number of landlords asking for financial support more than double to 800 over six months as problems worsened.
The smoking ban and pressures on consumer spending have weighed heavily on pub profits. Industry statistics suggested beer volumes have fallen by nine per cent since the start of the smoking ban in England and Wales last year. Mr Tuppen said the group was currently providing around £2.5 million to £3 million of financial support to landlords.
"The number of landlords asking for financial help has more than doubled over the past six months. We're providing a range of measures over a three-month period to try and help them, but at the end of the day if trading doesn't improve then it may better for them to move on and try something else," he said.
"A good landlord will usually be able to trade his way out of the situation, but some won't make it."
Meanwhile, the firm said it might be able to convert to a low-tax property company for the start of its next financial year on October 1, the earliest date hoped for by analysts.
The Government ruled last week that Enterprise could convert into a Real Estate Investment Trust (REIT), boosting shares across the pubs industry on speculation more might be able to slash their tax bills.
"It would clearly be good if we can get it done by the beginning of the financial year and it's not impossible," said Mr Tuppen.
"We've got a timeframe that would seek to get us converted by the autumn."
Enterprise, which has about 7,700 pubs, just behind Burton-upon-Trent rival Punch Taverns on around 8,500, made profit before tax and one off items of £132 million in the six months to March 31, in line with analysts' average forecast, according to a company poll.
"The consumer is continuing to take a real battering. Costs are rising, taxes are rising, house prices appear to be under pressure," said Mr Tuppen.
But he said pubs were more resilient than many consumer-facing industries, such as retailing.
"It's still just as difficult to get a table for Sunday lunch in your favourite pub."
Landsbanki analyst Kate Pettern thought Enterprise was coping better than bigger rival Punch.
"We estimate that EBITDA (earnings before interest, tax, depreciation and amortisation) per pub is down approximately 1.5 per cent. This result is better than Punch Taverns' down two per cent and we suspect reflects Enterprise Inns' somewhat better quality estate," she wrote in a research note.
Mr Tuppen said that among the help for landlords were things like short-term concessions on rents.
"This is likely to continue for some time," he said.
Enterprise proposed an interim dividend of 5.8 pence a share, up 12 per cent on the same time last year.