Adnams has warned that trading in the UK, particularly in the on-trade, has "deteriorated significantly" in the year so far.

In a trading update, released earlier this week, the UK brewer and pub operator warned that its beer volumes in the five months to May were down by 6% year-on-year. The company noted that it sells 93% of its beer volumes outside of its own pub estate, meaning it has been "heavily exposed to the extremely weak trading environment in the national on-trade". Adnams said it has also been affected by higher raw material prices and significantly increased distribution costs.

The performance of Adnams' pub estate and hotels was described as "resilient" in spite of the tough operating environment, but the company's investment plans will be reviewed, "in light of current market conditions".

Adnams said it consequently expects operating profits for the six months to the end of June to be "substantially lower" than a year ago. "In the absence of a significant improvement in trading conditions, it is anticipated that operating profits for the full year to end December 2008 will also be below prior year levels," the company added.

Adnams will announce it results for the first six months of this year next month.