Merko Ehitus grows both sales revenue and net profit in Q2
Merko Ehitus’s Q2 and first half-year revenue and net profit outpaced the respective figures for last year. Sales revenue in Q2 was EUR 70.7 million and net profit was EUR 2.2 million; while 6-month sales revenue was EUR 128.8 million and net profit was EUR 3.2 million. This year, the group’s contract portfolio has increased significantly, particularly in Latvia. In six months, Merko has sold 80 apartments more than in the same period last year and has increased revenue from apartment sales by 54%.
“Sales revenue and profit showed the expected growth compared to 2016. I’m glad that sales revenue increased on all of our home markets. We also increased our portfolio of construction contracts, above all in Latvia, where we have launched construction on several major projects. In this connection, the number of our Latvian company’s employees has grown. Competition between general contractors continues to be very close in all of the countries in which we operate, however. Furthermore, the availability of workforce and stability of suppliers is becoming more and more complicated. This places general contractors under pressure both with regard to profit margins and deadlines and forces a search for solutions,“ said the chairman of the AS Merko Ehitus management board, Andres Trink.
“Apartment sales have gone according to expectations. Compared to the same period last year, we sold 50% more apartments in the first six months of this year and earned 54% more sales revenue. A contributing factor was the simultaneous completion and sales of several projects at the same time in the first half-year. The apartment market in Tallinn and Vilnius continues to be active, even though it appears that the price ceiling has been reached and in the future, we expect somewhat longer sales periods in some development projects. The Riga apartment market has not gained the same amount of momentum as in Tallinn and Vilnius,“ said Andres Trink.
Merko Ehitus sold 98 apartments in Q2 and 239 apartments in the first six months (2016 figures: 58 and 159 apartments), totalling EUR 10.5 million and EUR 26.9 million, respectively (not including VAT). In six months, Merko has launched the construction of 385 apartments and has invested EUR 18.4 million into the development projects launched this year and projects already in progress.
The group’s Q2 2017 revenue was EUR 70.7 million, EBITDA was EUR 4.1 million, profit before taxes was EUR 3.3 million and net profit was EUR 2.2 million. For 6 months 2017, sales revenue was EUR 128.8 million, EBITDA was EUR 6.0 million, profit before taxes was EUR 4.4 million and net profit was EUR 3.2 million. In Q2 of 2017, the group companies entered into new contracts in a total of EUR 158 million, including for the construction of the multifunctional centre Akropole and Z-Towers complex in Riga and the addition to the air traffic control centre in Tallinn.
As of 30 June 2017, the group had a contract portfolio of EUR 387.5 million compared to EUR 279.4 million in the same period in the previous year. Among major projects in progress in Q2 in Estonia were the construction of T1 shopping centre, Maakri Kvartal, Öpiku office building B, and the tram line that will serve Tallinn Airport. In Latvia, the biggest projects in progress were the multifunctional centre Akropole in Riga and the Ventspils music school and concert hall; in Lithuania, the Radisson Blu Hotel Lietuva, the Philip Morris plant and a hotel and residential building complex in the Rinktines Urban development project.