Analysts who met Scottish & Newcastle's finance director last week have cut their expectations of pre-tax earnings for the company's managed pubs operations for 2002-3 by £8m, or 3.5%, to £222m.
However, they told clients that a change in the way S&N is paying for its acquisition of the Finnish brewer Hartwall, with more shares and less cash, is likely to save the group £37m in net interest.
As a result, Stuart Price at WestLB Panmure is now predicting group profit before tax at S&N for 2002-3 of £573m, up £27m on the bank's previous prediction. Price said this was even before any benefits from S&N's likely early exercise of its put option with Danone to pay off the rest of the money due for its purchase of Kronenbourg.
S&N was tipped to be ready to hand Danone more than Eu2bn £1.24bn in the second half to secure full ownership of their combined beer business.
The terms of a deal agreed in April 2000 allowed for Danone to wait until next April to ask for the money, or to keep a minority stake in the beer venture but S&N said it already had bank debt arranged to cover the payment.
Price told clients WestLB was maintaining its "outperform" stance on S&N, with a price target of 642p "for now", though with rumours circulating that the group was preparing to sell its managed pubs, restaurants and lodges estate, probably on a sale-and-leaseback basis, "we expect further upside as the news flow on the sale of the pub freeholds gathers momentum."
The group said a possible sale of its pubs, bars and hotels could raise up to £2bn for any international brewing acquisitions it might decide to make.
It said the sale of the properties would involve it retaining management of the 1,450-outlet portfolio. Analysts are tipping a sale and leaseback of the freeholds as the likeliest option. It is thought a deal is unlikely to happen until later this year.
Credit Suisse First Boston downgraded the stock to "hold". However, Deutsche Bank repeated its "buy" advice and raised its target price on the stock to 650p from 600p.
Deutsche Bank said S&N was one of the few defensive stocks in its range of covered companies that continued to look good value.
However, they told clients that a change in the way S&N is paying for its acquisition of the Finnish brewer Hartwall, with more shares and less cash, is likely to save the group £37m in net interest.
As a result, Stuart Price at WestLB Panmure is now predicting group profit before tax at S&N for 2002-3 of £573m, up £27m on the bank's previous prediction. Price said this was even before any benefits from S&N's likely early exercise of its put option with Danone to pay off the rest of the money due for its purchase of Kronenbourg.
S&N was tipped to be ready to hand Danone more than Eu2bn £1.24bn in the second half to secure full ownership of their combined beer business.
The terms of a deal agreed in April 2000 allowed for Danone to wait until next April to ask for the money, or to keep a minority stake in the beer venture but S&N said it already had bank debt arranged to cover the payment.
Price told clients WestLB was maintaining its "outperform" stance on S&N, with a price target of 642p "for now", though with rumours circulating that the group was preparing to sell its managed pubs, restaurants and lodges estate, probably on a sale-and-leaseback basis, "we expect further upside as the news flow on the sale of the pub freeholds gathers momentum."
The group said a possible sale of its pubs, bars and hotels could raise up to £2bn for any international brewing acquisitions it might decide to make.
It said the sale of the properties would involve it retaining management of the 1,450-outlet portfolio. Analysts are tipping a sale and leaseback of the freeholds as the likeliest option. It is thought a deal is unlikely to happen until later this year.
Credit Suisse First Boston downgraded the stock to "hold". However, Deutsche Bank repeated its "buy" advice and raised its target price on the stock to 650p from 600p.
Deutsche Bank said S&N was one of the few defensive stocks in its range of covered companies that continued to look good value.
