Formerly Wolverhampton & Dudley Breweries, Marston’s said underlying profit before tax rose 1.5 percent to £41.6 million in the 26 weeks to the end of March, on revenue 8.5 percent higher at 305 million.
On average analysts had expected a pretax profit of 40.6 million, according to a Reuters poll of four investment banks.
The firm, which brews Pedigree ale, said it estimated that the implementation cost of holding its property assets in a Real Estate Investment Trust (REIT) would offset any tax advantages.
“We do not plan at this stage to split the business into an operating and property company, but will continue to review the situation as the market for REITs in the pub sector develops.”
Marston’s shares, which have risen almost 5 percent since the start of the month, dropped 2.5 percent in early trade to 454-1/2 pence to value the business at £1.27 billion.
Marston’s has about 2,500 pubs, 568 of which it manages as chains such as Pitcher and Piano, with the rest run by tenants.
In recent years the firm has been buying smaller rivals to boost scale, while earlier this month it sold off 279 pubs ahead of a smoking ban in England to a group including Manchester United boss Alex Ferguson and X-Factor’s Simon Cowell.
Marston’s said it would use the proceeds to help it buy back 150 million pounds of its shares by the end of December, 50 million pounds more than it had originally earmarked.
It also raised its interim dividend to 4.36 pence per share from 3.63p a year ago.
Chief Executive Ralph Findlay told reporters the firm would still look to buy up rivals, though its appetite could be suppressed by rising prices for pubs across the sector.
“We remain interested on consolidation and we will keep an eye on what is going on,” he said.
A smoking ban was imposed in Wales, where Marston’s has 180 pubs, on April 2.
Findlay said although it was early days and sunny weather had filled its beer gardens, the ban had had little effect.
“We are encouraged by the start we have made in Wales, we are ahead on a like-for-like basis in our managed and our tenanted pubs.”
“The performance has been stronger than it has been in our English estate,” he added.
REITs pay no tax on their earnings, which they mostly distribute to shareholders as dividends. They must make 75 percent of their turnover from rental income.
Earlier this week All Bar One and Harvester owner Mitchells & Butlers said it was working with activist shareholder Robert Tchenguiz to spin its bricks and mortar assets into a separate property company, while Enterprise Inns is looking to secure REIT status without splitting the group.
Finance Director Paul Inglett told reporters the firm could look to go down the same route as Enterprise.
“Its early days … I think it’s a possibility. I think it’s more possible than probable though.”