Adnams, the Suffolk brewer, has issued a profit warning, saying that its first half operating profits would be "substantially lower" than last year's £1.2m, due to tough trading conditions and increasing costs.
The brewer said that trading conditions had deteriorated significantly since the end of April, with on-trade volumes down 10.4% and total ale volumes declining by 8.3% in the five months to May.
The company said that its full-year operating profits would also be below the previous year's levels due to difficult trading conditions, which it described as the toughest in recent years.
It warned that trading conditions could worsen before the market recovered.
The group, nevertheless, said that it was well-positioned to withstand the current downturn and that its confidence in the future remained strong.
The company said the performance of its pub estate and hotels had been resilient despite the tough trading, with five new Cellar & Kitchen stores having opened in 2007 and an outlet in Richmond, Surrey in 2008.
It said that it was reviewing the timing of the new store rollout, but remained confident that the concept was successful