2025 9 months and III quarter consolidated unaudited interim report
COMMENTARY FROM MANAGEMENT
Merko Ehitus generated revenue of EUR 74 million in the third quarter of 2025
and EUR 242 million in the first 9 months of the year. Net profit for Q3
amounted to EUR 15.0 million, while net profit for the 9-month period was EUR
36.7 million. So far this year, Merko has handed over 55% more apartments and
commercial premises to buyers than in the first nine months of last year.
According to the management of Merko Ehitus, the third quarter, some of the most
significant construction projects in recent times and the largest in Merko's
history were completed - the Arter quarter together with the interior works of
the Swedbank headquarters in Tallinn and the Pabrad? defence campus in
Lithuania. As a result, group is returning to its more usual revenue structure.
During the first nine months of this year, the share of real estate development
increased and accounted for more than a quarter of sales revenue. Consequently,
the operating profit margin has also improved.
The real estate market remains most active in Lithuania, while year-on-year
conditions have improved in Estonia, and Latvia continues on a slightly upward
trend. The market recovery is well illustrated by the fact that, in a nine-month
comparison, group companies have handed over more than 55% more apartments and
commercial units to buyers. The volume of apartments under construction and
completed has slightly decreased compared to the end of the second quarter of
this year, and half of them are located in Vilnius, which has the most active
market. Management continues to forecast real estate market developments hand in
hand with changes in consumer confidence.
In the construction market, there are few tenders and mostly they involve large-
scale works. Competition remains extremely intense and, as a result, service
margins are low. This year and last year, Merko companies have signed several
large-scale contracts related to the construction of Rail Baltica, including
Estonia's largest alliance contract as part of an international consortium. Due
to the nature of these contracts, where a significant amount of time is spent on
design, actual construction will begin in the coming quarters and will be
reflected in sales revenue accordingly. The volume of unfinished construction
work in the group is at a historical high.
The group's financial position is strong, and net debt is negative. Joint
ventures involved in the construction and maintenance of energy infrastructure,
Connecto Infra and Connecto Eesti, continue to contribute strongly to the
results. For Merko, these are financial investments, and the revenue of these
companies is not reflected in Merko's consolidated sales revenue. Connecto has a
high volume of work due to significant investments directed into the sector, but
many large-scale projects in this sector are also nearing completion, and
network operators' investment plans are expected to decline in the foreseeable
future.
In the first nine months of 2025, Merko signed new construction contracts worth
EUR 323 million, the largest of which were the Rail Baltica Ülemiste terminal in
Tallinn, the Rail Baltica mainline section from Tallinn to Pärnu, a hotel and
event centre in Pärnu, and the construction of foundations and infrastructure
for the Augstkalni wind farm in Latvia. As of the end of the third quarter, the
balance of secured order-book for external clients amounted to EUR 486 million.
During the nine months of 2025, Merko handed over 315 apartments and three
commercial units to buyers in Estonia, Latvia, and Lithuania. In the same
period, Merko started the construction and sale of 771 new apartments and 21
commercial units, nearly two-thirds of them in the Shnipishki? Urban and Vilnel?s
Skverai projects in Vilnius. As of the end of the third quarter, the balance
sheet included 1,089 apartments, of which 19% were covered by pre-sale
agreements. The largest ongoing development projects were Uus-Veerenni,
Noblessner and Lahekalda in Tallinn, Õielehe in Jüri, and Erminurme in Tartu;
Lucavsala, Arena Garden Towers and Mezhpils?ta in Riga; and Vilnel?s Skverai and
Shnipishki? Urban in Vilnius.
In the third quarter of 2025, the largest construction sites were the Hyatt
hotel building, the Kullo Hobby Centre and the City Plaza 2 office building in
Tallinn, the National Defence Building in Tartu, and the hotel and event centre
in Pärnu, the Rail Baltica Ülemiste joint terminal, and the fourth stage of the
Rail Baltica mainline in Harju County and the Tallinn-Pärnu section. In
Lithuania, the largest construction sites were wind farm infrastructure in the
Pag?giai, Telshiai and Pasvalys regions, as well as various national defence
buildings and infrastructure. In Latvia, construction is underway on a solar
power plant in V?rme Parish, a student hotel in Riga, and infrastructure in
Augstkalni wind farm.
OVERVIEW OF THE III QUARTER AND 9 MONTHS RESULTS
PROFITABILITY
2025 9 months' pre-tax profit was EUR 40.2 million and Q3 2025 was EUR 16.6
million (9M 2024: EUR 49.6 million and Q3 2024 was EUR 31.3 million), which
brought the pre-tax profit margin to 16.6% (9M 2024: 13.1%).
Net profit attributable to shareholders for 9 months 2025 was EUR 36.7 million
(9M 2024: EUR 44.8 million) and for Q3 2025 net profit attributable to
shareholders was EUR 15.0 million (Q3 2024: EUR 27.3 million). 9 months net
profit margin was 15.2% (9M 2024: 11.8%).
REVENUE
Q3 2025 revenue was EUR 73.9 million (Q3 2024: EUR 175.1 million) and 9 months'
revenue was EUR 241.8 million (9M 2024: EUR 378.7 million). 9 months' revenue
decreased by 36.1% compared to same period last year. The share of revenue
earned outside Estonia in 9 months 2025 was 47.4% (9M 2024: 60.1%).
SECURED ORDER BOOK
As of 30 September 2025, the group's secured order book was EUR 486.2 million
(30 September 2024: EUR 430.9 million). In 9 months 2025, group companies signed
contracts in the amount of EUR 322.8 million (9M 2024: EUR 292.1 million). In Q3
2025, new contracts were signed in the amount of EUR 99.6 million (Q3 2024: EUR
152.6 million).
REAL ESTATE DEVELOPMENT
In 9 months 2025, the group sold a total of 315 apartments; in 9 months 2024,
the group sold 194 apartments. The group earned a revenue of EUR 59.7 million
from sale of own developed apartments in 9 months 2025 and EUR 36.0 million in
9 months 2024. In Q3 of 2025 a total of 93 apartments were sold, compared to 74
apartments in Q3 2024, and earned a revenue of EUR 14.9 million from sale of own
developed apartments (Q3 2024: EUR 14.6 million).
CASH POSITION
At the end of the reporting period, the group had EUR 34.3 million in cash and
cash equivalents, and equity of EUR 257.3 million (64.4% of total assets).
Comparable figures as of 30 September 2024 were EUR 61.1 million and EUR 234.6
million (51.3% of total assets), respectively. As of 30 September 2025, the
group's net debt was negative EUR 8.0 million (30 September 2024: negative EUR
22.2 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
2025 2024 2025 2024 2024
9 months 9 months III quarter III quarter 12 months
Revenue 241,799 378,676 73,917 175,108 539,049
Cost of goods sold (194,749) (315,597) (55,938) (135,738) (443,162)
Gross profit 47,050 63,079 17,979 39,370 95,887
Marketing expenses (3,753) (3,366) (1,052) (1,073) (5,030)
General and
administrative
expenses (12,998) (15,115) (4,251) (6,485) (21,908)
Other operating income 1,597 4,965 514 572 5,724
Other operating
expenses (271) (2,512) (175) (46) (2,190)
Operating profit 31,625 47,051 13,015 32,338 72,483
Finance income/costs 8,531 2,524 3,630 (1,071) 3,931
incl. finance
income/costs from
investments in
subsidiaries - (3,119) - (3,119) (5,087)
finance income/costs
from joint ventures 8,486 6,634 3,642 2,979 9,951
interest expense (611) (1,469) (216) (353) (1,823)
foreign exchange gain
(loss) 19 (931) 33 (875) (948)
other financial income
(expenses) 637 1,409 171 297 1,838
Profit before tax 40,156 49,575 16,645 31,267 76,414
Corporate income tax
expense (3,472) (4,867) (1,637) (4,004) (11,820)
Net profit for
financial year 36,684 44,708 15,008 27,263 64,594
incl. net profit
attributable to equity
holders of the parent 36,684 44,781 15,008 27,302 64,668
net profit
attributable to non-
controlling interest - (73) - (39) (74)
Other comprehensive
income, which can
subsequently be
classified in the
income statement
Currency translation
differences of foreign
entities (11) 129 (18) 105 105
Comprehensive income
for the period 36,673 44,837 14,990 27,368 64,699
incl. net profit
attributable to equity
holders of the parent 36,673 44,902 14,990 27,401 64,764
net profit
attributable to non-
controlling interest - (65) - (33) (65)
Earnings per share for
profit attributable to
equity holders of the
parent (basic and
diluted, in EUR) 2.07 2.53 0.85 1.54 3.65
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
30.09.2025 30.09.2024 31.12.2024
ASSETS
Current assets
Cash and cash equivalents 34,279 61,115 91,879
Short-term deposits 26,000 5,000 10,000
Trade and other receivables 54,537 108,930 51,419
Prepaid corporate income tax 714 377 270
Inventories 200,646 199,628 196,521
316,176 375,050 350,089
Non-current assets
Investments in joint ventures 30,060 25,549 21,571
Other shares and securities 80 80 80
Other long-term loans and receivables 18,281 21,580 40,196
Deferred income tax assets 3,594 5,849 5,056
Investment property 12,426 12,645 12,606
Property, plant and equipment 18,306 16,609 17,147
Intangible assets 703 466 350
83,450 82,778 97,006
TOTAL ASSETS 399,626 457,828 447,095
LIABILITIES
Current liabilities
Borrowings 9,549 11,541 21,303
Payables and prepayments 92,325 161,699 129,786
Income tax liability 31 6,838 7,101
Short-term provisions 8,978 7,325 7,678
110,883 187,403 165,868
Non-current liabilities
Long-term borrowings 16,710 27,357 12,102
Deferred income tax liability 6,773 1,715 6,148
Other long-term payables 7,959 6,925 8,719
31,442 35,997 26,969
TOTAL LIABILITIES 142,325 223,400 192,837
EQUITY
Non-controlling interests - (220) -
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 (52) (16) (41)
Retained earnings 248,631 225,942 245,577
257,301 234,648 254,258
TOTAL EQUITY 257,301 234,428 254,258
TOTAL LIABILITIES AND EQUITY 399,626 457,828 447,095
Interim report is attached to the announcement and is also published on NASDAQ
Tallinn and Merko's web page (group.merko.ee (https://group.merko.ee/en/)).
Urmas Somelar
Head of Finance
AS Merko Ehitus
+372 650 1250
[email protected] (mailto:[email protected])
AS Merko Ehitus (group.merko.ee (https://group.merko.ee/en/)) group companies
construct buildings and infrastructure and develop real estate. We create a
better living environment and build the future. We operate in Estonia, Latvia
and Lithuania. As at the end of 2024, the group employed 605 people, and the
group's revenue for 2024 was EUR 539 million.