Despite difficult trading last year Welsh brewer SA Brain said it believed it had "continued to perform better than the market" in the year to September 30 2006.
Turnover for the group rose 0.2 per cent in the period to £123.6m, with operating profits down 28 per cent to £8.6m and pre-tax profits down 12 per cent to £10m.
Trading conditions had "constrained sales across the group", the brewer's chairman, C M Brain said in a statement.
The first quarter had seen trading "broadly in line" with expectations, with the group's managed pubs "following a more stable pattern than last year".
However its tenanted pubs were "clearly finding conditions difficult".
Energy costs and fees attached to the new licensing regime had increased 22 per cent and 28 per cent respectively in 2006, although the brewer said it did not expect its core costs to increase significantly in 2007.
The results statement was published before the introduction of the Welsh smoking ban on April 2 this year, which the group acknowledged would prove to be "a challenge".
Brain's chief executive Scott Waddington is quoted as saying that "the smoking ban will be even more challenging for our tenants as these sites in the main have made less progress in developing food offers and still rely on good levels of beer volumes that are likely to decline after the ban.
"However we are preparing for these changes and have a full range of innovative solutions, including financing at affordable rates."
Waddington said Brain's was "as well placed as anyone to deal with current market conditions and potentially secure new opportunities moving forward".