Published: 2019-05-09 07:00:00 CEST
Merko Ehitus
Quarterly report

2019 3 months consolidated unaudited interim report


In Q1 of 2019, Merko Ehitus posted revenue of EUR 77 million and net profit of EUR 2.8 million. The number of apartments delivered to buyers in Q1 of this year grew more than 20% year-over-year.

Nearly 4% decrease in revenue in the first quarter was expected, considering the trend of decreasing construction orders on the market and the fact that exceptionally large construction projects in the group’s portfolio in recent years were completed. In the first quarter, the group entered into more new construction contracts than we did a year ago during the same period, but as the profit margins on construction contracts are low due to high price competition, the growth in revenue is not a goal unto itself. It was positive that the net profitability improved in the first quarter. In the construction market, the share of government contracts is increasing and the volume of public procurements is significantly influencing the outlook on the construction market in the years to come regarding buildings and especially infrastructure.

In Q1 of 2019, Merko Ehitus posted revenue of EUR 77 million (Q1 2018: EUR 80 million), EBITDA was EUR 3.5 million (Q1 2018: 1.8 million) and net profit EUR 2.8 million (Q1 2018: EUR 1.1 million). In Q1, new construction contracts worth EUR 32 million were signed, the largest of these being the construction of a support warehouse and the expansion of a medical centre in Tapa armed forces campus, public water supply and sewerage pipe renovation in Harju County and the extension of the Sindi 330 kV substation.

For Merko Ehitus apartment development is a strategic business area, and this year’s planned investment into that area is around EUR 100 million. At the moment, the group has more than 1,000 apartments in development in Estonia, Latvia and Lithuania, of which more than half will be completed in 2020,” said Andres Trink.

No significant changes took place on the apartment market in the Baltic capitals in Q1. The price level is stabilizing in Tallinn and Vilnius due to an increased supply of new apartments: quality, integral residential environment and the developer’s professionalism have become increasingly important. Considering the low transaction volumes on the Riga apartment market and improving macroeconomic indicators, the growth potential is good there. In 2018, the group launched two development projects in Riga with about 200 apartments, which will be completed in 2020.

In Q1 of 2019, Merko Ehitus handed over 63 apartments to buyers, which is more than 20% above the level shown a year ago during the same period. Merko’s largest projects include Uus-Veerenni and Pikaliiva residential communities in Tallinn, Gaiļezers and Viesturdārzs developments in Riga and Vilnelės slėnis and Rinktinės Urban developments in Vilnius.

One area of concern is the situation on the Baltic banking market, where decreased competition is worsening companies’ access to credit. The tightening requirements on acceptance of bank customers as well as on their transactions can have a negative impact on economic activity in the Baltics. This may, gradually, also manifest itself in a decline of real estate market activity.

As of 31 March 2019, the secured order book of Merko Ehitus group amounted to EUR 190 million, compared to EUR 292 million as at the same date last year. In Q1, the largest projects in progress in Estonia were Pärnu mnt 186 commercial building, student home of Rakvere Vocational School, the Maakri Kvartal business complex, expansion and construction work on the logistics building and medical centre at the Defence Forces Tapa base, dredging and reconstruction works of Hundipea port, and laying undersea cables under the Suur Väin and Väike Väin straits; in Latvia, construction on the Akropole multifunctional centre, Alfa shopping centre and Lidl logistics centre; and in Lithuania, Hotel Neringa, Quadrum office building and two school buildings. In Norway, the largest projects in progress included design and construction of Tesla service centre and renovation of an office building at Møllergata 23-25, Oslo.


Net profit attributable to equity holders of the parent in 3 months 2019 was EUR 2.8 million (3M 2018: EUR 1.1 million), having increased by 151.7% compared to the same period last year. Net profit margin increased to 3.6% (3M 2018: 1.4%).

Profit before tax in 3 months 2019 was EUR 3.0 million (3M 2018: EUR 1.3 million), which brought the profit before tax margin to 3.9% (3M 2018: 1.6%).

The 3 months 2019 revenue was EUR 76.8 million (3M 2018: EUR 80.3 million). 3 months’ revenue has decreased by 4.3% compared to same period last year. The share of revenue earned outside Estonia in 3 months 2019 was 60.8% (3M 2018: 57.5%).

As at 31 March 2019, the group’s secured order book was EUR 190.0 million (31 March 2018: EUR 291.9 million). In 3 months 2019, group companies signed new contracts in the amount of EUR 32.2 million (3M 2018: EUR 22.3 million).

In 3 months 2019, the group sold a total of 63 apartments (incl. 29 apartments in a joint venture); in 3 months 2018, the group sold 51 apartments (incl. 25 apartment in a joint venture). The group earned a revenue of EUR 4.6 million from sale of own developed apartments in 3 months 2019 and EUR 4.3 million in 3 months 2018.

At the end of the reporting period, the group had EUR 33.0 million in cash and cash equivalents, and equity EUR 134.6 million (48.7% of total assets). Comparable figures as at 31 March 2018 were EUR 27.6 million and EUR 131.3 million (47.6% of total assets), respectively. As at 31 March 2019, the group had net debt of EUR 9.9 million (31 March 2018: EUR 23.1 million).

The general meeting of shareholders held on 8 May 2019 resolved to approve the profit allocation proposal for 2018 and to distribute EUR 17.7 million (1 euro per share) in dividends from retained earnings. This is equivalent to a 92% dividend rate for 2018.


in thousand euros

3 months
3 months
12 months
Revenue 76,845 80,310 418,011
Cost of goods sold (70,639) (76,227) (384,962)
Gross profit 6,206 4,083 33,049
Marketing expenses (851) (806) (3,285)
General and administrative expenses (3,124) (2,819) (12,304)
Other operating income 701 852 3,527
Other operating expenses (35) (32) (1,115)
Operating profit 2,897 1,278 19,872
Finance income/costs 83 (26) (97)
incl. finance income/costs from sale of subsidiary and  liquidation - - (62)
finance income/costs from joint venture 222 136 653
interest expense (135) (153) (652)
foreign exchange gain (loss) - (1) 5
other financial income (expenses) (4) (8) (41)
Profit before tax 2,980 1,252 19,775
Corporate income tax expense (75) (90) (375)
Net profit for financial year 2,905 1,162 19,400
incl. net profit attributable to equity holders of the parent 2,778 1,104 19,343
net profit attributable to non-controlling interest 127 58 57
Other comprehensive income, which can subsequently be classified in the income statement      
Currency translation differences of foreign entities 32 13 (6)
Comprehensive income for the period 2,937 1,175 19,394
incl. net profit attributable to equity holders of the parent 2,808 1,117 19,324
net profit attributable to non-controlling interest 129 58 70
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 0.16 0.06 1.09


in thousand euros

  31.03.2019 31.03.2018 31.12.2018
Current assets      
Cash and cash equivalents 32,970 27,600 39,978
Trade and other receivables 75,297 85,027 76,183
Prepaid corporate income tax 224 549 224
Inventories 130,019 121,754 117,992
  238,510 234,930 234,377
Non-current assets      
Investments in joint venture 954 215 732
Other long-term loans and receivables 11,043 15,051 10,391
Deferred income tax assets - 5 -
Investment property 14,140 15,655 13,771
Property, plant and equipment 10,853 9,358 9,715
Intangible assets 700 511 671
  37,690 40,795 35,280
TOTAL ASSETS 276,200 275,725 269,657
Current liabilities      
Borrowings 15,624 13,673 19,900
Payables and prepayments 82,764 81,761 77,016
Income tax liability 420 484 381
Short-term provisions 7,081 4,119 8,100
  105,889 100,037 105,397
Non-current liabilities      
Long-term borrowings 27,220 37,003 24,266
Deferred income tax liability 1,521 1,299 1,481
Other long-term payables 2,299 1,474 2,179
  31,040 39,776 27,926
TOTAL LIABILITIES 136,929 139,813 133,323
Non-controlling interests 4,706 4,625 4,577
Equity attributable to equity holders of the parent      
Share capital 7,929 7,929 7,929
Statutory reserve capital 793 793 793
Currency translation differences (691) (689) (721)
Retained earnings 126,534 123,254 123,756
  134,565 131,287 131,757
TOTAL EQUITY 139,271 135,912 136,334
TOTAL LIABILITIES AND EQUITY 276,200 275,725 269,657

Interim report and the investor presentation are attached to the announcement and are also published on NASDAQ Tallinn and Merko’s web page (

Priit Roosimägi
Head of Group Finance Unit
AS Merko Ehitus
+372 650 1250

AS Merko Ehitus ( group consists of Estonia’s leading construction company AS Merko Ehitus Eesti, the Latvian-market-oriented SIA Merks, UAB Merko Statyba operating on the Lithuanian market, and the Norwegian construction company Peritus Entreprenør AS. Besides provision of construction service as a main contractor, the group’s other major area of activity is apartment development. As at the end of 2018, the group employed 764 people, and the group’s revenue for 2018 was EUR 418 million.