THE construction materials group, CRH, is expected to report half year profits in the order of £62 million to £65 million tomorrow, but most interest in the company will focus on whether CRH will make any announcement about the acquisition of Tilcon, the American arm of the British conglomerate, BTR.

With CRH in the "close season" ahead of its interim results, CRH management has kept a low profile as rumours of a £180-£200 million acquisition of Tilcon continues to circulate. Certainly, the belief among British fund managers is that CRH is close to a deal on Tilcon. Whether a deal of this scale can be tied up to be announced with the interim results remains to be seen.

Analysts in Dublin are reluctant to comment publicly on their expectations of a CRH takeover of Tilcon, but all agree that the £200 million mentioned for Tilcon could easily be covered by CRH without the need of a rights issue.

Some analysts believe, however, that with such strong demand for CRH shares, especially in Britain, the company may be tempted to link a rights issue with a Tilcon acquisition.

Currently, analysts are projecting a year end debt/equity ratio of little more than 30 per cent for CRH, on the basis of expected 1996 acquisition spending of £300-£350 million. But the true strength of CRH's balance sheet and its huge cash generating ability are reflected in its interest cover, where analysts are expecting interest payments to be covered 10 times by 1996 operating profits.

Buying Tilcon at the £200 million suggested in the British media over the weekend would not stretch CRH's balance sheet, with gearing still less than 60 per cent at the end of the year.

Some Irish institutions might baulk at contributing to a rights issue for a company whose balance sheet is already comfortable, but market sources believe that any shortfall in a rights issue at the Irish end will be easily filled by British institutions keen to increase their stake in CRH. Currently about 40 per cent of CRH shares are held outside Ireland.

The half year results being announced tomorrow are expected to show steady if unspectacular progress, with the group's progress being restrained by a slowdown in construction activity in Britain and continental Europe.

CRH's Irish and US operations arc, however, expected to show strong growth. Davy Stockbrokers is expecting half year profits of £62 million and earnings per share of 13.5p, although Goodbody has taken a more positive view with a profits forecast of £65.2 million and earnings per share of 14.5p.

Most analysts agree, however, that CRH will have a stronger second half, with recent acquisitions making first time contributions and an improvement in the weather, which has such an impact on construction activity, boosting output.

Full year profit forecasts for the group are in the order of £160 million with earnings per share in the order of 35-36p.