SHARES in Alfred McAlpine plunged to a 12-month low of 177.5p before rallying last week after the firm decided to use money earmarked for shareholders on acquisitions instead.
McAlpine, which has splashed out £200 million on support services and investments in the past two years, spent £23.4 million on buying back shares last year and pledged to return £100 million more following the sale of its house building division to Wimpey in August 2001.
But executive director Ian Grice, who takes over from Oliver Whitehead as chief executive on August 10, said market conditions had changed hugely in the past 18 months.
The firm has around £88 million net cash and will instead use this money to finance lightning raids into the support services and investment sectors for acquisitions.
Mr Grice said: 'This gives us the ability to react quickly for acquisitions. We'd like to buy a company with good management in good markets or take on contracts and put them into existing businesses.'
He added that the firm was not interested in buying troubled contractor McNicholas Construction but admitted it was eyeing up the firm's £40 milliona-year BT maintenance contract in the south-east.
Pre-tax profits for 2002 halved to £21.7 million after the housing sale. Turnover slumped 11 per cent to £768 million.
The firm's capital projects arm saw pre-tax profits drop 10 per cent to £22.8 million but margins were again at an industry benchmark of 5.7 per cent.
McAlpine wins one out of every two Private Finance Initiative roads jobs and Mr Grice wants to match this across every PFI sector.