Merko Ehitus posts EUR 379 million revenue for the first 9 months of 2024

Merko Ehitus posted revenue of EUR 379 million and a net profit of EUR 44.8 million for the first nine months of the current year. Third quarter revenue was EUR 175 million and net profit was EUR 27.3 million. Sales of construction services made up about 90% of the 9-month revenue.

“We have accelerated the construction of some projects at the request of our clients, which has increased our current construction volumes, helped reduce costs and increase efficiency. As a result, we ended the 9 months with a stronger result than planned. We reached the home stretch for several large and complex projects, including the largest construction project in Merko’s history, Arter quarter, with close to 80% of its 150-million-euro volume now completed. One of the Arter buildings is finished, interior works on the second building are being completed and interior works of the highest building are continuing. We have been conservative in our cost estimations and assessment of risks, which we have managed to avoid during the long construction period.  Consequently, the revenue and profit of several ongoing projects planned for next year are being realised this year,” said the Chairman of the Management Board, Ivo Volkov. “Our secured order-book is at a good level, remaining above more than EUR 400 million throughout this year. The market is still tight and competition is intense, and there is a significant increase in risk appetite in the bid prices of some construction service providers.” 

 “The company’s strong financial position and the launch of fewer new development projects have helped us to keep interest costs low even during high-interest-rate period. The rapid growth of construction prices has subsided and been replaced by a moderate annual 1–2% growth as forecasted earlier. Until there is no foreseeable drop in energy prices and wages, there is no reason to expect the construction price index to decrease,” said Volkov. Connecto Eesti, a joint venture company engaged in the construction and maintenance of energy infrastructure, is making an increasingly strong contribution to the group’s results, with a high level of workload due to the large investments in this area.

“The results in the real estate development business area are, as expected, significantly more modest than last year, but still clearly more positive than we expected in the start of this year. A livelier market can be noticed on all of our markets; with Lithuania clearly standing out with its long-lasting positive economic sentiment. Success in apartment sales in Estonia, Latvia and Lithuania is quite clearly linked to consumer confidence. We are moderately optimistic about the future and assess our inventory of finished apartments as suitable to market needs – besides apartments under construction, ready-to-move-in homes can also be purchased,” said Volkov commenting on the real estate development business area.

In the first nine months of 2024, the group companies signed new construction contracts worth EUR 292 million and the secured order-book as of the end of September stood at EUR 431 million. The largest contracts signed in Q3 were for the Tartu mnt 1 office building (the future headquarters of LHV Group) and the fourth stage of the mainline of Rail Baltica in Harju County in Estonia; a student hotel in Riga, Latvia; and additional work on a wind farm in Pagėgiai, Lithuania.

The largest sites under construction in Q3 were, in Estonia, the TKM Group logistics centre, the Hampton by Hilton and Hyatt hotel buildings, Arter Quarter, Estonian Defence Forces buildings on Ämari base, a tram line between Old City Harbour and Rail Baltica Ülemiste passenger terminal and the first stage of Ülemiste multimodal transport junction and the Rail Baltica’s Tõdva highway overpasses. In Lithuania, the largest construction sites were wind farm infrastructure in Kelmė, Pagėgiai and Telšiai regions, a substation in Kelmė and various national defence buildings and infrastructure.  In Latvia, a solar farm in Vārme Municipality was under construction. In the first nine months of current year, Merko has delivered 194 apartments and 11 commercial units to buyers and invested EUR 31 million into the real estate business. As of the end of September, the group companies had 591 unsold apartments which were either ready or under construction, and 87 apartments covered by preliminary sale contracts. Merko launched the construction of 175 apartments and sales in four projects this year: a new phase of Veerenni in Tallinn, Õielehe in Jüri, a new phase of Erminurme in Tartu and the first phase of Lucavsala in Riga. The largest development projects under construction were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Erminurme in Tartu; Viesturdārzs, Mežpilsēta and Magnolijas in Riga; and Vilnelės Skverai in Vilnius.