Punch Taverns, Scotland's biggest pub landlord with more than 300 tenanted houses, has reported a 20% fall in profit as reduced consumer spending continued to squeeze the business.

Punch has about 4800 leased pubs, but 1850 are in its "turnaround estate" earmarked for disposal.

The proportion of failing pubs in Scotland is far higher, with only 32 of its 172 outlets in the core estate – though 45 managed pubs were included in the demerger of Spirit Group last August.

Punch saw profits in the 28 weeks to March 3 fall by £8 million to £33m as like-for-like net income in the core estate dipped 2.1%.

The group said the decline was driven by pubs which had been returned by landlords to the group and placed under temporary management, with the majority of the estate performing well.

Punch said it was on track to close between 400 and 500 outlets this financial year.

Roger Whiteside, chief executive, said consumer market conditions had been "weaker" in recent months but the group was still in line to meet full-year expectations.

Mr Whiteside has previously said the group is considering plans to restructure its £2.3 bil-lion debts amid speculation that its bondholders could be asked to take a haircut.

However, Punch made no reference to the speculation surrounding bondholders in the results.

The group said its pubs in the south continue to fare better than those in the north, which has been harder hit by the economic downturn.

The tough conditions reflect those seen at rivals JD Wetherspoon, which last month said it would slow the pace of its expansion amid sustained cost pressures and weaker sales.

But Punch remained upbeat about its prospects and said that the Queen's Diamond Jubilee, the European football championships and the Olympic Games would boost the second half of its financial year.

Looking ahead, the company said it will increase the number of pubs per year in which it invests, from 130 in the first half of the year to 400 for the full year, with the aim of boosting the percentage of food sales in its core estate to 35% from 20%.

Shares fell 7% to 9.75p.