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Merko Ehitus 2022 net profit exceeds EUR 34 million

Merko Ehitus posted revenue figures of EUR 143 million for Q4 and EUR 410 million for 2022 as a whole. Compared to the same period of the previous year, net profit in Q4 increased by 27% to EUR 17.6 million and for the year as a whole, by 19% to EUR 34.6 million. In 2022, Merko delivered 923 apartments to buyers. In coordination with the supervisory board, the group’s management board proposes to the general meeting of shareholders to pay one euro per share as dividends.

“The group’s results for 2022 reflect the increase of investments in previous years into apartment development business area, the choice of the right development projects and sale of apartments on all three Baltic markets. We are also pleased that our construction service business area succeeded in managing risks extremely well in complicated market conditions. I would like to thank all of the group’s personnel for their great contribution, our partners and customers for their cooperation, and all home owners for their trust in Merko,” said the Chairman of the Management Board of AS Merko Ehitus, Andres Trink. The greatest share of Merko’s profit came from the real estate development business area and over the 12 months of the year, the group delivered a record 923 apartments and 9 commercial units.

“The outlook for the residential real estate market worsened last year rapidly in connection with soaring inflation and interest rates, as well as due to the uncertainty from the Ukraine war. The volume of preliminary sales of new apartments dropped to all-time lows in November, which made us slow down the tempo of launching new developments. Although the sales volume will also decrease in the years ahead along with the construction volume, our long-term position and development potential on the residential real estate market of the Baltic capitals remain solid. We hope that in the next 12 months, confidence will recover and demand for new housing will improve. This will be supported by growing need for homes with higher energy efficiency,” said Trink. Last year, the group launched the construction of 581 new apartments and invested a total of EUR 130 million into development projects, plus investments for the purchase of new immovable properties totalling EUR 26 million.

“There was much ambiguity in the construction service field last year in connection with the rapid growth of energy prices and other construction input prices. Both customers and construction enterprises spent much time and energy to find the best balance in sharing price and supply risks. Few new business real estate projects came on to the market, and a number of public procurements were postponed to future period and road construction investment volumes were downsized significantly. In this sort of complicated market situation, the volume of construction contracts we concluded last year and the portfolio of orders can be considered a fairly good footing for supporting the construction service business area for the next 12-24 months. Since a certain stabilization has been seen in construction process and an adaptation to inflation is also under way, hopefully new construction sites will come on to the market in future. We hope that the group companies’ capabilities will support continued investment into the energy sector. Since we are in the project management business and depend directly on orders, we will have to continue to adapt quickly to changes on the market,” Trink added.

In 2022, the group signed new construction contracts worth EUR 318 million (2021: EUR 288 million) and the balance of secured order book grew to EUR 297 million (2021: EUR 257 million).

During the 12 months, Merko launched five new developments with a total 581 apartments. As of year’s end, the group companies had 1,207 apartments under construction, of which almost half were covered by preliminary sale contracts. The largest apartment developments were Uus-Veerenni, Noblessneri and Lahekalda in Tallinn, Erminurme in Tartu; Viesturdārzs, Mežpilsēta and Magnolijas in Riga, and Vilneles Skverai in Vilnius.

In Q4 2022, the largest projects under construction in Estonia were the third phase of the Mustamäe medical campus of the North Estonia Medical Centre, Pelgulinna and Rae state gymnasiums, Arter Quarter and construction of infrastructure segments of the Republic of Estonia’s southeast land border, the tram line between Old City Harbour and Rail Baltic’s Ülemiste passenger terminal and renovations of Rannamõisa tee and Vana-Kalamaja street in Tallinn. In Latvia, projects in progress were the GUSTAVS business centre, Elemental Skanste’s office buildings and NATO facilities in Ādaži, and in Lithuania, infrastructure for several wind farms, a car service centre, and NATO training centre buildings in Vilnius.