*CEO sees flat margins in managed pubs due to consumer and cost pressures

*Feb-March sales down but trend expected to improve through the year

*Will keep options open about splitting firm to convert to REIT status

By Marc Jones

LONDON (Reuters) - The head of pub firm and brewer Marston's (MARS.L: Quote, Profile, Research) expects margins in its 550 managed pubs to remain flat this year, as rising costs and fragile consumer confidence corsets its ability to improve profitability.

"For this year I would expect them (managed division gross margins) to remain broadly in line with last year," Marston's Chief Executive Ralph Findlay told Reuters.

Britain's pubs have had a tough time recently as economic worries have forced the UK's pub goers to think harder about what they spend their money on. At the same time firms are having to cope with sharp rises in food, staff, beer and electricity costs and the first winter with a smoking ban.

"Like-for-like sales over February and March have been marginally negative," Findlay said, referring to the managed pubs, which are performing better than its 1,720 strong tenanted pub division. "We were up 1 percent when we last reported in January and now we are up 0.3 percent for the half year as a whole."

Findlay said the firm was also keeping a close eye on property tax talks between tenanted pub rival Enterprise Inns (ETI.L: Quote, Profile, Research) and Britain's government.