Published: 2020-04-08 21:45:00 CEST
Merko Ehitus
Annual Financial Report

Audited annual report 2019

AS Merko Ehitus consolidated audited financial results for 2019 remain unchanged compared to the preliminary disclosure on 13 February 2020.


Developments on the Baltic construction and real estate market continued as we expected in 2019. The rapid growth in construction volumes in recent years stabilized and developers have become more cautious in launching new real estate investments. Although state investments into infrastructure remained at the same level as in years past, the share of the public sector orders on the construction market has grown.

The decrease in Merko Group’s construction volumes, by more than 20% compared to the record level of 2018, was also expected. The group’s sales revenue decreased year-over-year in Estonia and Latvia but remained at the same level in Lithuania and grew in Norway. Almost one-half of the group’s revenue came from outside Estonia. In 2019, a number of outstanding major projects in all three Baltic capitals were completed, but new construction orders in the same volume did not take their place in the group’s portfolio. The reason for the decrease in construction orders was both the growth of input prices in the construction sector and the group’s strategy in selecting construction sites.

On the backdrop of decrease in sales revenue, we were however able to improve the group’s profitability and profit before taxes grew by 2.8% compared to a year ago. Profitability was supported by the team’s good work and everyday contribution to simplifying processes and reducing errors. Profitability was supported by the increased investments by the group into the apartment development business segment in all three Baltic states, and the greatest growth in investments last year was seen in Lithuania. In recent years, we have put the focus on larger development areas, where we can create an integrated residential environment and launch development projects stage by stage pursuant to demand. In 2019, close to 500 customers became owners of homes built by Merko. The largest projects launched or completed include, in Tallinn, Veerenni, Lahekalda, Noblessneri and Pikaliiva developments; in Riga, Viesturdārzs and Gaiļezera nami; and in Vilnius, Vilneles Slenis and Rinktines Urban.

Merko’s goal is to continue to be the preferred choice for construction service clients and apartment buyers who value quality and trustworthiness. Through the buildings and infrastructure we set up, we create a modern living environment and improve people’s quality of life. To this end, we continue giving back to society, examples of which are our long-term cooperation projects in developing the network of Estonian Health Trails, cooperation with the Estonian Tennis Association and the Art Museum of Estonia as well as with various universities. We operate based on the long-term view and put value on quality and trust.

In connection with the global viral pandemic, the construction and real estate market outlook for the near future has become difficult. Risks have risen sharply in the world economy as well as financial markets, due to which near term negative developments with unforeseeable magnitude cannot be ruled out. Among other, banks’ lending policy and conditions remain very important factors in market developments, but these depend also on the decisions and cooperation of companies and governmental institutions. We believe that strong capitalization and the capabilities of our team give Merko group a relative advantage in the execution of development and construction projects as well as in emerging from difficulties in the event of negative market developments.

I would like to thank all of Merko Group’s employees and partners for a productive year, also our customers and home buyers who have put their trust in Merko.

in thousand euros

  2019 2018
Revenue 326,779 418,011
Cost of goods sold (291,958) (384,962)
Gross profit 34,821 33,049
Marketing expenses (4,260) (3,285)
General and administrative expenses (12,988) (12,304)
Other operating income 2,983 3,527
Other operating expenses (1,318) (1,115)
Operating profit 19,238 19,872
Finance income 3 8
Finance costs (684) (696)
Profit (loss) from sale and liquidation of subsidiary - (62)
Profit (loss) from joint ventures 1,766 653
Profit before tax 20,323 19,775
Corporate income tax expense (3,833) (375)
Net profit for financial year 16,490 19,400
incl.   net profit attributable to equity holders of the parent 16,270 19,343
net profit attributable to non-controlling interest 220 57
Other comprehensive income (loss), which can subsequently be classified in the income statement    
Currency translation differences of foreign entities 13 (6)
Comprehensive income for the period 16,503 19,394
incl.   attributable to equity holders of the parent 16,281 19,324
attributable to non-controlling interest 222 70
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 0.92 1.09

in thousand euros

  31.12.2019 31.12.2018
Current assets    
Cash and cash equivalents 24,749 39,978
Trade and other receivables 50,413 76,183
Prepaid corporate income tax 104 224
Inventories 166,226 117,992
  241,492 234,377
Non-current assets    
Investments in joint ventures 2,498 732
Other long-term loans and receivables 11,094 10,391
Investment property 14,047 13,771
Property, plant and equipment 11,919 9,715
Intangible assets 777 671
  40,335 35,280
TOTAL ASSETS 281,827 269,657
Current liabilities    
Borrowings 20,725 19,900
Payables and prepayments 69,585 77,016
Income tax liability 812 381
Short-term provisions 7,976 8,100
  99,098 105,397
Non-current liabilities    
Long-term borrowings 43,001 24,266
Deferred income tax liability 1,682 1,481
Other long-term payables 3,491 2,179
  48,174 27,926
TOTAL LIABILITIES 147,272 133,323
Non-controlling interests 4,217 4,577
Equity attributable to equity holders of the parent    
Share capital 7,929 7,929
Statutory reserve capital 793 793
Currency translation differences (710) (721)
Retained earnings 122,326 123,756
  130,338 131,757
TOTAL EQUITY 134,555 136,334

AS Merko Ehitus audited annual report for 2019 is attached to the announcement and is also published on NASDAQ Tallinn and Merko’s web page (

Andres Trink
Chairman of Management Board
AS Merko Ehitus
+372 650 1250

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

AS Merko Ehitus ( ) group consists of AS Merko Ehitus Eesti in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør AS in Norway. Besides providing construction service as a main contractor, the group’s other major area of activity is apartment development. As at the end of 2019, the group employed 694 people, and the group’s revenue for 2019 was EUR 327 million.


2019 Merko Ehitus annual report.pdf