COMMENTARY FROM MANAGEMENT
Merko Ehitus posted revenue of EUR 85.2 million and net profit of EUR 10.5 million in Q1 2025. Real estate development accounted for 30% of the group’s Q1 revenue, having more than doubled in this category compared to the same period a year ago.
According to the management of Merko Ehitus, the results of the first quarter are characterised primarily by increased activity on the real estate market in Lithuania and increase in sales from real estate development, as well as by the continuing realisation of the strong construction services portfolio and the completion of some projects ahead of schedule.
The real estate market has clearly improved in Lithuania compared to last year. Although the sale of new apartments is not up significantly in Estonia, Merko has increased its market share there as well. Whereas real estate development accounted for 16% of the group’s revenue in Q1 of 2024, this year it provided close to 30%. The low comparison base in terms of sales volumes in 2024 should however be borne in mind. Apartment buyers are currently preferring finished apartments or ones that will be ready in the short term, with significantly less appetite for signing contracts for units in projects yet to be launched. As a result, the balance of the group’ apartment is kept at slightly higher levels than previous years.
In Q1, the group’s companies signed a significantly higher volume of new construction contracts compared to last year. Although the balance of secured order-book is lower than in Q1 of 2024, Merko portfolio is strong and comparable with 2022 volumes. The largest projects in progress are wind farms’ infrastructure and national defence projects in Lithuania, the Vārme solar park in Latvia and City Plaza 2 office building in Tallinn, as well as the interior work on the 28-storey building in the Arter Quarter, where Swedbank will move its headquarters. In recent months, Merko has submitted the best or winning bids at several large public procurements, but due to the complexity of the projects, the customers have not yet made the final decisions. Merko group concluded new construction contracts worth EUR 50.6 million in Q1 of 2025, compared to EUR 10.5 million in the same period in 2024. The secured order-book stood at EUR 332 million at the end of the first quarter.
In Q1 of 2025, Merko delivered 121 apartments and one commercial unit to buyers in Estonia, Latvia and Lithuania, compared to 59 apartments and seven commercial units in the first quarter of last year. Revenue from real estate development was EUR 26 million in Q1 of 2025 compared to EUR 13 million in Q1 of 2024. In Q1 2025, Merko launched Allveelaeva 2 residential development in Tallinn and Šnipiškių Urban in Vilnius. The largest developments under construction were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Erminurme in Tartu; Lucavsala, Arena Garden Towers, Viesturdārzs, Mežpilsēta and Magnolijas in Riga; and Vilnelės Skverai in Vilnius.
The largest projects under way in Q1 of 2025 in Estonia were the Hyatt hotel building, Arter Quarter, the City Plaza 2 office building in Tallinn, the national defence building in Tartu, the first stage of the Ülemiste multimodal transport junction for Rail Baltica and the fourth stage of the mainline of the Rail Baltica. In Lithuania, the largest ones were wind farm infrastructure projects in the Pagėgiai, Telšiai and Pasvalys regions and various national defence buildings and infrastructures. In Latvia, a solar park in Vārme Municipality and a student hotel in Riga were under construction.
OVERVIEW OF THE 3 MONTHS RESULTS
PROFITABILITY
2025 3 months’ pre-tax profit was EUR 11.6 million (3M 2024: EUR 5.2 million), which brought the pre-tax profit margin to 13.6% (3M 2024: 6.4%).
Net profit attributable to shareholders for 3 months 2025 was EUR 10.5 million (3M 2024: EUR 4.4 million) and 3 months net profit margin was 12.3% (3M 2024: 5.5%).
REVENUE
2025 3 months’ revenue was EUR 85.2 million (3M 2024: EUR 81.2 million). 3 months’ revenue increased by 5.0% compared to same period last year. The share of revenue earned outside Estonia in 3 months 2025 was 45.6% (3M 2024: 62.3%).
SECURED ORDER BOOK
As of 31 March 2025, the group’s secured order book was EUR 331.9 million (31 March 2024: EUR 419.0 million). In 3 months 2025, group companies signed contracts in the amount of EUR 50.6 million (3M 2024: EUR 10.5 million).
REAL ESTATE DEVELOPMENT
In 3 months 2025, the group sold a total of 121 apartments; in 3 months 2024, the group sold 59 apartments. The group earned a revenue of EUR 24.7 million from sale of own developed apartments in 3 months 2025 and EUR 10.8 million in 3 months 2024.
CASH POSITION
At the end of the reporting period, the group had EUR 78.5 million in cash and cash equivalents, and equity of EUR 264.7 million (61.0% of total assets). Comparable figures as of 31 March 2024 were EUR 88.4 million and EUR 216.6 million (50.8% of total assets), respectively. As of 31 March 2025, the group’s net debt was negative EUR 53.4 million (31 March 2024: negative EUR 39.6 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| 2025 3 months | 2024 3 months | 2024 12 months | |
| Revenue | 85,236 | 81,185 | 539,049 |
| Cost of goods sold | (70,323) | (72,301) | (443,162) |
| Gross profit | 14,913 | 8,884 | 95,887 |
| Marketing expenses | (1,275) | (1,068) | (5,030) |
| General and administrative expenses | (4,275) | (4,142) | (21,908) |
| Other operating income | 561 | 1,324 | 5,724 |
| Other operating expenses | (41) | (953) | (2,190) |
| Operating profit | 9,883 | 4,045 | 72,483 |
| Finance income/costs | 1,717 | 1,157 | 3,931 |
| incl. finance income/costs from investments in subsidiaries | – | – | (5,087) |
| finance income/costs from joint ventures | 1,501 | 1,568 | 9,951 |
| interest expense | (210) | (655) | (1,823) |
| foreign exchange gain (loss) | 115 | (190) | (948) |
| other financial income (expenses) | 311 | 434 | 1,838 |
| Profit before tax | 11,600 | 5,202 | 76,414 |
| Corporate income tax expense | (1,140) | (818) | (11,820) |
| Net profit for financial year | 10,460 | 4,384 | 64,594 |
| incl. net profit attributable to equity holders of the parent | 10,460 | 4,427 | 64,668 |
| net profit attributable to non-controlling interest | – | (43) | (74) |
| Other comprehensive income, which can subsequently be classified in the income statement | |||
| Currency translation differences of foreign entities | (59) | 106 | 105 |
| Comprehensive income for the period | 10,401 | 4,490 | 64,699 |
| incl. net profit attributable to equity holders of the parent | 10,401 | 4,526 | 64,764 |
| net profit attributable to non-controlling interest | – | (36) | (65) |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 0.59 | 0.25 | 3.65 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 31.03.2025 | 31.03.2024 | 31.12.2024 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 78,525 | 88,353 | 91,879 |
| Short-term deposits | 17,000 | – | 10,000 |
| Trade and other receivables | 62,815 | 58,929 | 51,419 |
| Prepaid corporate income tax | 105 | 6 | 270 |
| Inventories | 197,861 | 196,518 | 196,521 |
| 356,306 | 343,806 | 350,089 | |
| Non-current assets | |||
| Investments in joint ventures | 23,072 | 23,483 | 21,571 |
| Other shares and securities | 80 | 80 | 80 |
| Other long-term loans and receivables | 19,044 | 20,427 | 40,196 |
| Deferred income tax assets | 4,830 | 4,998 | 5,056 |
| Investment property | 12,525 | 16,740 | 12,606 |
| Property, plant and equipment | 17,419 | 16,093 | 17,147 |
| Intangible assets | 388 | 487 | 350 |
| 77,358 | 82,308 | 97,006 | |
| TOTAL ASSETS | 433,664 | 426,114 | 447,095 |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 10,110 | 12,909 | 21,303 |
| Payables and prepayments | 114,153 | 134,216 | 129,786 |
| Income tax liability | 6,487 | 6,335 | 7,101 |
| Short-term provisions | 8,564 | 10,551 | 7,678 |
| 139,314 | 164,011 | 165,868 | |
| Non-current liabilities | |||
| Long-term borrowings | 15,002 | 35,882 | 12,102 |
| Deferred income tax liability | 6,539 | 4,489 | 6,148 |
| Other long-term payables | 8,150 | 5,342 | 8,719 |
| 29,691 | 45,713 | 26,969 | |
| TOTAL LIABILITIES | 169,005 | 209,724 | 192,837 |
| EQUITY | |||
| Non-controlling interests | – | (191) | – |
| 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 | (100) | (739) | (41) |
| Retained earnings | 256,037 | 208,598 | 245,577 |
| 264,659 | 216,581 | 254,258 | |
| TOTAL EQUITY | 264,659 | 216,390 | 254,258 |
| TOTAL LIABILITIES AND EQUITY | 433,664 | 426,114 | 447,095 |
