Sir Paul Nicholson, chairman, said the rate of decline in beer sales had halved over the past 12 months and had now virtually levelled out.
His finance director, Neal Gossage, said: "We believe there is a long term future for Vaux as an integrated brewer and the discounts being negotiated will change."
Results for the six months to 15 March show brewing hit by the higher discounts Vaux is having to offer its retail customers, while hotels remained the group's star business last year. Unveiling a 14 per cent rise in pre- tax profits to pounds 15.2m, Vaux revealed that trading results from the Swallow Hotels chain had soared 28 per cent to pounds 11.5m - close to half the total.
The figures show that regional hotels are sharing in the current boom in bookings. Occupancy rates at the 30 hotels improved by 2.7 percentage points to 68.6 per cent and achieved room rates increased by 9 per cent to pounds 49.12.
There were divergent results from beer. Profits from the tenanted estate dropped 12 per cent to pounds 5.5 m, reflecting a drop in the number of pubs from 771 to 695 and lower beer sales, which slipped 2.7 per cent.
However, there was better news from the 171-strong managed portfolio, where profits were up 14 per cent at pounds 4.7m. Food turnover rose 7.3 per cent, drink by 4.5 per cent and income from machines was up nearly 30 per cent to pounds 1.2m.
Brewing and wholesaling now represents a tiny portion of the business.
Profits there rose just 2.7 per cent to pounds 1.4m. Volume sales rose, but the company was forced to offer bigger discounts, while contract sales fell 40 per cent. Half the beer sold in Vaux pubs now come from other suppliers.
Earnings per share rose from 7.23p to 8.33p and the interim dividend rises from 3.56p to 3.7p. The shares dipped 0.5p to 277.5p yesterday.