Burtonwood Brewery and Fuller, Smith & Turner, who both run traditional pub and brewing businesses, shrugged off difficult market conditions to report impressive increases in first half profits. Ben Cobley reports.

Fullers' figures were especially strong, showing a 20 per cent rise in profits before tax and exceptional items to £7.7 million. Last time round the group was hit by £5 million of charges from a combination of property write-downs and its exit from an ill-fated move into late-night bars, branded Boardwalks. No exceptionals were included this time.

Now the group is focussing on the operation of conventional tenanted and managed pubs, hotels and its highly-successful brewing operation, which makes beers like London Pride and Organic Honeydew. The latter division has been doing very well, increasing profits by 23 per cent to £2.8 million in the six month period to September, on turnover raised 5 per cent to £30.9 million.

Meanwhile the Inns division increased profits by 14 per cent to £8.2 million, on turnover raised three per cent to £48.9 million and Hotels saw profits up 150 per cent to an undisclosed level. This was mostly because hotels opened last year were up-and-running for the whole of the period this time.

Analysts reckon the main attraction of Fuller's shares is the company's asset backing, since most of its pub estate is owned outright, rather than rented. NAV per share of 646p means that the shares trade on an attractive 31 per cent discount to its assets. Share buybacks are also to continue, which should improve NAV per share as well.

Paul Hickman of KBC Peel Hunt rates the shares a 'Buy', predicting an 11 per cent increase in pre-tax profits to £16.6 million for the year and noting the asset backing and share buyback programme.

But while Fullers' operations are centred on London and the South-East, Burtonwood's pubs are mostly situated around the North West and Midlands. With a predominantly tenanted estate, the company managed to increase pre-tax profits by nine per cent to £4.2 million in the six months to September on turnover down slightly at £24 million.

Unlike Fullers, whose executive chairman Anthony Fuller admits to 'what continues to be a challenging time' for the pub industry especially in its heartland, the City of London, Burtonwood remains confident of trading for the rest of the year. Its shares also trade at a significant discount to net asset value, with a share price of 249p representing a hefty 40 per cent discount to NAV of 419p.

The trading performance of these groups bears a stark contrast to bar-club operators SFI and Springwood, who have both issued profit warnings. Yates, Young & Co and Regent Inns have also complained about a competitive marketplace that has been made even tougher by JD Wetherspoon's heavy discounting as well as higher staff costs and insurance premiums.