Powerscreen seeking an acquisition

POWERSCREEN International, the Northern Ireland-based maker of screening and crushing equipment for the construction industry, is looking to use its pounds 21m cash resources to make an acquisition that will complement its core activities, writes Terence Wilkinson.

Reporting a 12.5 per cent increase in pre-tax profits to pounds 12.6m for the six months to 30 September and an 11 per cent rise in the interim dividend to 2p, Powerscreen said it wanted to buy a company that would benefit from its wide experience in the materials handling industry.

Powerscreen has gained a stock market following for its ability to push new products through the companies it acquires, generating earnings growth.

Analysts say that at currently low levels of interest rates diversion of Powerscreen's cash towards an acquisition would quickly enhance earnings.

In its important US market Powerscreen is benefiting from recycling legislation.

Tim Steer, of Smith New Court, has increased his profits forecast for the year to next March from pounds 26m to pounds 27m.

'A prospective p/e of 16 means that the shares are not incredibly cheap,' he said. 'But it is a quality stock and does not face a lot of competition in its main markets.'

The shares rose 3p to 372p.