COMMENTARY FROM MANAGEMENT
Merko Ehitus generated revenue of EUR 83 million in the second quarter of 2025 and EUR 168 million in the first half of the year. Net profit for Q2 amounted to EUR 11.2 million, while net profit for the six-month period was EUR 21.7 million. The share of real estate development in revenue and profit increased in the second quarter. Merko launched the construction and sale of 723 new apartments in the first half of the year, most of them in Vilnius, where the real estate market remains active.
According to the management of Merko Ehitus, the second quarter results were in line with expectations with no significant market changes during the quarter. Supported by a more active real estate market, Merko performance in the real estate development business has improved, accounting for nearly 30% of our half-year sales revenue and with the number of apartments handed over to buyers increasing by almost 85%. In terms of positivity, the Vilnius real estate market continues to outperform Tallinn and Riga significantly. The Estonian real estate market has activated in the second quarter, but time will tell whether this was due to consumers trying to avoid price increases related to the upcoming VAT hike or it signals a real improvement in consumer confidence.
The volumes in the construction market remain low-side and competition is very tight across all Merko home markets. Group construction contracts portfolio increased by EUR 223 million euros in the first half of the year, which is remarkable considering market situation. According to the management, the public sector with its infrastructure and defence-related projects, as well as large energy companies, continue to be the biggest construction services buyers in Estonia, Latvia, and Lithuania in the upcoming few years.
The largest construction contracts signed in Q2 were the Ülemiste terminal in Tallinn (worth EUR 84.8 million) and the Rail Baltica mainline section between Tallinn and Pärnu (expected to be worth approximately EUR 75 million to Merko as part of the consortium). At the end of Q2, the balance of secured order-book for external clients stood at EUR 444 million.
During the first half of 2025, Merko handed over 222 apartments and two commercial units to buyers in Estonia, Latvia, and Lithuania. In the first six months, Merko launched the construction and sale of 723 new apartments and 21 commercial premises, including total 530 apartments and 15 commercial premises in the new Šnipiškių Urban project and the next stage of the Vilnelės Skverai development in Vilnius. As of the end of Q2, Merko’s balance sheet included 1,134 apartments, of which 17% were covered by pre-sale agreements. Merko’s largest ongoing development projects included Uus-Veerenni, Noblessner, and Lahekalda in Tallinn; Õielehe in Jüri township; and Erminurme in Tartu; Lucavsala, Arena Garden Towers, Viesturdārzs, Mežpilsēta, and Magnolijas in Riga; and Vilnelės Skverai and Šnipiškių Urban in Vilnius.
The largest projects underway in Q2 of 2025 in Estonia were the Hyatt hotel building, Tallinna Hobby Center Kullo, and the City Plaza 2 office building in Tallinn, as well as the national defence building in Tartu, the Rail Baltica Ülemiste passenger terminal and fourth stage of the Rail Baltica mainline. 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 energy park in Vārme Municipality and a student hotel in Riga were under construction.
OVERVIEW OF THE II QUARTER AND 6 MONTHS RESULTS
PROFITABILITY
2025 6 months’ pre-tax profit was EUR 23.5 million and Q2 2025 was EUR 11.9 million (6M 2024: EUR 18.3 million and Q2 2024 was EUR 13.1 million), which brought the pre-tax profit margin to 14.0% (6M 2024: 9.0%).
Net profit attributable to shareholders for 6 months 2025 was EUR 21.7 million (6M 2024: EUR 17.5 million) and for Q2 2025 net profit attributable to shareholders was EUR 11.2 million (Q2 2024: EUR 13.1 million). 6 months net profit margin was 12.9% (6M 2024: 8.6%).
REVENUE
Q2 2025 revenue was EUR 82.6 million (Q2 2024: EUR 122.4 million) and 6 months’ revenue was EUR 167.9 million (6M 2024: EUR 203.6 million). 6 months’ revenue decreased by 17.5% compared to same period last year. The share of revenue earned outside Estonia in 6 months 2025 was 43.8% (6M 2024: 57.9%).
SECURED ORDER BOOK
As of 30 June 2025, the group’s secured order book was EUR 443.8 million (30 June 2024: EUR 437.5 million). In 6 months 2025, group companies signed contracts in the amount of EUR 223.1 million (6M 2024: EUR 139.5 million). In Q2 2025, new contracts were signed in the amount of EUR 172.6 million (Q2 2024: EUR 129.0 million).
REAL ESTATE DEVELOPMENT
In 6 months 2025, the group sold a total of 222 apartments; in 6 months 2024, the group sold 120 apartments. The group earned a revenue of EUR 44.9 million from sale of own developed apartments in 6 months 2025 and EUR 21.3 million in 6 months 2024. In Q2 of 2025 a total of 101 apartments were sold, compared to 61 apartments in Q2 2024, and earned a revenue of EUR 20.2 million from sale of own developed apartments (Q2 2024: EUR 10.6 million).
CASH POSITION
At the end of the reporting period, the group had EUR 25.9 million in cash and cash equivalents, and equity of EUR 242.3 million (60.1% of total assets). Comparable figures as of 30 June 2024 were EUR 44.2 million and EUR 206.5 million (49.4% of total assets), respectively. As of 30 June 2025, the group’s net debt was negative EUR 1.1 million (30 June 2024: negative EUR 10.9 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| 2025 6 months | 2024 6 months | 2025 II quarter | 2024 II quarter | 2024 12 months | |
| Revenue | 167,882 | 203,568 | 82,646 | 122,383 | 539,049 |
| Cost of goods sold | (138,811) | (179,859) | (68,488) | (107,558) | (443,162) |
| Gross profit | 29,071 | 23,709 | 14,158 | 14,825 | 95,887 |
| Marketing expenses | (2,701) | (2,293) | (1,426) | (1,225) | (5,030) |
| General and administrative expenses | (8,747) | (8,630) | (4,472) | (4,488) | (21,908) |
| Other operating income | 1,083 | 4,393 | 522 | 3,069 | 5,724 |
| Other operating expenses | (96) | (2,466) | (55) | (1,513) | (2,190) |
| Operating profit | 18,610 | 14,713 | 8,727 | 10,668 | 72,483 |
| Finance income/costs | 4,901 | 3,595 | 3,184 | 2,438 | 3,931 |
| incl. finance income/costs from investments in subsidiaries | – | – | – | – | (5,087) |
| finance income/costs from joint ventures | 4,844 | 3,655 | 3,343 | 2,087 | 9,951 |
| interest expense | (395) | (1,116) | (185) | (461) | (1,823) |
| foreign exchange gain (loss) | (14) | (56) | (129) | 134 | (948) |
| other financial income (expenses) | 466 | 1,112 | 155 | 678 | 1,838 |
| Profit before tax | 23,511 | 18,308 | 11,911 | 13,106 | 76,414 |
| Corporate income tax expense | (1,835) | (863) | (695) | (45) | (11,820) |
| Net profit for financial year | 21,676 | 17,445 | 11,216 | 13,061 | 64,594 |
| incl. net profit attributable to equity holders of the parent | 21,676 | 17,479 | 11,216 | 13,052 | 64,668 |
| net profit attributable to non-controlling interest | – | (34) | – | 9 | (74) |
| Other comprehensive income, which can subsequently be classified in the income statement | |||||
| Currency translation differences of foreign entities | 7 | 24 | 66 | (82) | 105 |
| Comprehensive income for the period | 21,683 | 17,469 | 11,282 | 12,979 | 64,699 |
| incl. net profit attributable to equity holders of the parent | 21,683 | 17,501 | 11,282 | 12,975 | 64,764 |
| net profit attributable to non-controlling interest | – | (32) | – | 4 | (65) |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 1.22 | 0.99 | 0.63 | 0.74 | 3.65 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 30.06.2025 | 30.06.2024 | 31.12.2024 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 25,862 | 44,180 | 91,879 |
| Short-term deposits | 23,000 | – | 10,000 |
| Trade and other receivables | 75,989 | 94,401 | 51,419 |
| Prepaid corporate income tax | 934 | 310 | 270 |
| Inventories | 196,552 | 200,768 | 196,521 |
| 322,337 | 339,659 | 350,089 | |
| Non-current assets | |||
| Investments in joint ventures | 26,415 | 22,570 | 21,571 |
| Other shares and securities | 80 | 80 | 80 |
| Other long-term loans and receivables | 18,645 | 20,057 | 40,196 |
| Deferred income tax assets | 4,789 | 6,077 | 5,056 |
| Investment property | 12,475 | 12,674 | 12,606 |
| Property, plant and equipment | 18,171 | 16,648 | 17,147 |
| Intangible assets | 593 | 488 | 350 |
| 81,168 | 78,594 | 97,006 | |
| TOTAL ASSETS | 403,505 | 418,253 | 447,095 |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 9,712 | 5,840 | 21,303 |
| Payables and prepayments | 112,484 | 153,595 | 129,786 |
| Income tax liability | 112 | 5,971 | 7,101 |
| Short-term provisions | 9,165 | 12,301 | 7,678 |
| 131,473 | 177,707 | 165,868 | |
| Non-current liabilities | |||
| Long-term borrowings | 15,018 | 27,426 | 12,102 |
| Deferred income tax liability | 6,623 | 1,626 | 6,148 |
| Other long-term payables | 8,080 | 5,135 | 8,719 |
| 29,721 | 34,187 | 26,969 | |
| TOTAL LIABILITIES | 161,194 | 211,894 | 192,837 |
| EQUITY | |||
| Non-controlling interests | – | (187) | – |
| 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 | (34) | (816) | (41) |
| Retained earnings | 233,623 | 198,640 | 245,577 |
| 242,311 | 206,546 | 254,258 | |
| TOTAL EQUITY | 242,311 | 206,359 | 254,258 |
| TOTAL LIABILITIES AND EQUITY | 403,505 | 418,253 | 447,095 |
