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Merko Ehitus posts H1 revenue of EUR 156 million and net profit of EUR 7.2 million

Revenue for Merko Ehitus was EUR 88 million in Q2 2022, and EUR 156 million in H1 2022, while the respective figures for net profit were EUR 4.2 million and EUR 7.2 million. This year, Merko has delivered 214 apartments to buyers and a number of development projects will be completed in the second half of the year.

“The results for Q2 met our expectations, considering the current market situation and the adaptation of all participants in the construction sector to the rapid rise in construction prices. Net profit in the second quarter was also influenced by a EUR 0.3 million donation to Ukrainian support projects and income tax expense that is EUR 0.3 million higher than a year ago,” the chairman of the AS Merko Ehitus management board, Andres Trink.

“The influence of inflation and rising input prices in the group’s sector of construction service continues to be high, yet the implementation of all the construction projects in progress has continued according to plan. The situation is complicated in all construction sectors, yet most critical in road construction where the rise in input prices has been the highest and new investment plans have been put on hold. We share the concern of sector leaders as to the sustainability of the sector,” added Trink.

In H1, the group companies entered into new construction contracts worth EUR 193 million and the secured order-book balance stood at EUR 323 million as of the end of June. “Our construction orders portfolio is currently strong, yet there is little business real estate and new infrastructure construction orders on the market as a whole. Considering the energy crisis and green transition policy, it is somewhat surprising that only a few major renewable energy and high energy efficient building designs have come on to the market. The faster customers adapt to the higher input prices and supply chain problems that construction companies are facing, the faster the planned projects will reach construction. We must find solutions for sharing the risks between participants and continue to invest regardless of faster inflation,” said Trink.

In the first six months of this year, Merko delivered 214 new apartments and one commercial unit to buyers and a number of apartment developments in progress are expected to be completed in H2 as planned. “Our sales of new apartments have continued even after the price rise caused by rising input prices, which shows that the market is gradually adapting to the new prices. The supply of new apartments on the market as a whole has decreased. Residential construction is for us a business area with a long perspective and we have continued investing into new development projects, although at a more moderate pace,“ he added.

During H1, the group launched construction of 186 new apartments and four commercial units in Riga. As of the end of the quarter, over 1700 apartments were under construction in the three Baltic states, over half of which have covered by preliminary sale contracts and will be completed in 2022 and 2023. The largest apartment developments were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Erminurme in Tartu, Viesturdarzs, Mežpilsēta and Magnolijas in Riga, and Vilneles Skverai in Vilnius. In Q2 of 2022, the largest sites under construction in Estonia are the third phase of the Mustamäe medical campus of the North-Estonia Medical Centre, the Tallinn School of Music and Ballet, St. John’s School, Pelgulinna State gymnasium and the Arter quarter, and also the construction of infrastructure segments of the Republic of Estonia’s southeast land border and reconstruction of Rannamõisa tee in Tallinn. In Latvia, projects in progress included the Orkla wafer and biscuit production plant, GUSTAVS business centre, Elemental Skanste office buildings, NATO facilities in Adaži and Kauguri city park and youth house. In Lithuania, Merko is working on infrastructure for a number of wind farms, and a car service centre in Vilnius.