Punch vows to battle through slump after pub profits dive

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Punch Taverns today revealed that Christmas was at least as bad as expected and admits it may be years before pubs regain strength.

With five pubs a day closing, publicans are increasingly fractious. Some say the entire business model of tied, property-led outfits such as Punch is to blame.

One protest group, Justice for Licensees, is organising a rally this month for 100 tenants to protest against Punch's allegedly high rents, steep beer prices and "alley-cat morals". Punch chief executive Giles Thorley says it is doing everything it can to support publicans, making rent concessions and cutting the price of the beer it sells to the pubs.

The Business, Enterprise and Regulatory Reform department is considering whether to order that the tie which forces publicans to buy beer from the pub companies is broken.

"The process of the review was pretty high profile," said Thorley. "It got a lot of media attention, and yet there were only eight complaints against Punch out of 7000 pubs. I said I was happy to investigate every single one and speak to the individuals concerned. We are doing everything reasonable we can."

Punch is burdened by debts of £4.5 billion, compared with equity of £175 million. Thorley claims predictions of doom from City analysts are unfair. "Of course I think it is overdone," he said. "I have got 20,000 employees to look after and my job is to make sure this company survives. We are pretty confident that we have put the right steps in place. Unfortunately the market is spooked by anyone who has got debts."

In Punch's managed estate, sales were down 2.5% in the 20 weeks to 10 January. Profits from the leased business are down 12% over the same period. Punch will pay no dividend this year as it tries to pay off debts.