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Brewer and pub operator Marston's has posted a 16 per cent drop in pre-tax profit to £35 million for its first half in "difficult" trading conditions.

Marston's is Britain's biggest brewer of cask beer and operates around 2,300 pubs and bars across the country. The company said it has been affected by the smoking bans and weakening consumer confidence, concerns that are affecting the whole of the industry.

Like-for-like profit per pub was down 0.6 per cent in the 26 weeks to March 29th, although better food sales helped boost like-for-likes 0.3 per cent at Marston's Inns & Taverns division.

Chief executive Ralph Findlay said: "Although trading conditions have been difficult for the industry, our performance has been resilient.

"Our integrated business model provides us with operational flexibility and a wider range of investment opportunities, and has enabled us to offset significant increases in the cost of food, labour and brewing raw materials."

On the subject of real estate investment trusts (REITs), a tax efficient way of separating property income from operational income, Marston's said although some of its rivals have already converted, it may not be the right way to go for the company.

Finance director Paul Inglett said: "Our business structure is different to those of our competitors, so the decisions for us are not so straightforward. Certainly in the short term, the volatility of the credit markets makes it very difficult anyway."

He added that the company is looking at REITs very closely and although there is no fixed timetable for a decision, Marston's is hoping to make an announcement in the coming months.

For the full year, Marston's said it remains "cautious" as the recent increase in beer duty by the government has added further costs to pubs and has contributed to the widening price gap between pubs and supermarkets.

Marston's also joined other pub operators in criticising the government for the tax hike on alcohol announced in the Budget.

Marston's said: "As a pub operator and brewer we promote the responsible, supervised retailing of alcohol and are disappointed that the effect of the government's tax increase is likely to undermine this objective."

The company said despite the challenging conditions, it is well placed to exploit long-term trends such as the growth in casual dining, and will continue to invest in its pubs.