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Net profit for Merko Ehitus at nine-month mark exceeds EUR 15 million

Third-quarter revenue for Merko Ehitus was EUR 81 million and net profit for the same period was EUR 5.5 million. The revenue for the first nine months of 2021 grew by 8% to EUR 227 million and net profit by 17% to over EUR 15 million. This year in the three Baltics, Merko has launched construction of more than 1,300 apartments due to be completed in the next two years.

Chairman of the management board of AS Merko Ehitus, Andres Trink, commented: “The situation on the general construction contracting market continues to be extremely complicated due to global supply chain problems. There has also been a jump in the prices of materials and there is a major shortage of qualified workforce. The risks to on-time completion of projects and staying within budget are quite sizeable today and unfortunately we are also seeing them be realized on some sites. There are fewer new projects and actual orders on the market, since customers have not managed to adapt to the changes and higher prices on the construction market. These problems are more manageable in the apartment development sector, where we have greater control of the development and construction process.”

“The share of apartment developments in the group’s nine-month revenue is, as expected, lower because of the timing of the completion of projects and delivery to buyers. The delivery of pre-sold apartments to buyers continues in the following quarters, which is also reflected in the group’s financial result. New sales of apartments are going according to plan – most of the finished apartments have been sold and a large part of the apartments under construction are reserved under preliminary contracts of sale.”

In the first nine months of 2021, Merko delivered 197apartments and 7commercial units to buyers and launched construction of 1,300 apartments expected to be completed in 2022 and 2023. The largest residential developments are Noblessneri, Uus-Veerenni, Odra, Metsatuka and Lahekalda (Tallinn); Erminurme (Tartu), Viesturdārzs and Mežpilsēta (Riga) and Vilneles Skverai (Vilnius).

“Considering the changes that have taken place in the last few years on the construction and real estate market, we can say that the group’s companies have adjusted rapidly and we can be satisfied with the nine-month results. We have been able to maintain and even increase profitability despite the supply chain problems and rise in input prices. Our greater strategic focus on residential real estate development has also paid off so far. I would like to thank our company’s employees and all partners who have to contend with the extremely fraught situation,” Trink said. “Unfortunately, the latest developments regarding the coronavirus in the Baltic countries are very negative, and we must be prepared that high morbidity and restrictions will pose new obstacles to the normal course of processes in construction and real estate development in the coming months.”

The Merko group’s secured order-book balance grew to EUR 314million as of the end of Q3. In Q3 of 2021, Merko entered into new contracts worth EUR 138 million of which the biggest were a contract for the construction of the Elemental Skanste office buildings and Gustavs business centre in Riga and construction of wind farm infrastructure in the Akmenė and Šilalė region in Lithuania.

In the third quarter, Merko had under construction in Estonia the third development phase of the Mustamäe medical campus of the North-Estonia Medical Centre, the Tallinn School of Music and Ballet, the Liivalaia business and residential complex and the construction of infrastructure segments of the Republic of Estonia’s southeast land border. In Latvia, the works in progress were the Orkla wafer and biscuit production plant and NATO facilities in Ādaži, and the Kauguri city park and youth house. In Lithuania, infrastructure for a number of wind farms and the Kaunas district police headquarters building, NATO barracks and a production building for Continental Automotive.