Merko Ehitus posts H1 2024 revenue of EUR 204 million

Revenue for Merko Ehitus at the six-month mark of 2024 was EUR 204 million while net profit stood at EUR 17.5 million. Second-quarter revenue was EUR 122 million and net profit was EUR 13.1 million. The lower volumes from real estate development have been compensated by higher sales of construction services, which made up nearly 90% of revenue in the first half-year.

“Considering general sentiment on the construction and real estate market, we are satisfied with our second quarter and first half year results. We have managed well in the changed market situation. Profitability for the half-year has declined compared to last year due to the decrease in the share of the real estate development business. Orders are dramatically down in road construction, which is not a business area with too great an impact in our group. To sum up, our construction service portfolio continues to be strong and apartment sales in Q2 grew somewhat. Let’s hope that the market trough is behind us now,” said the Chairman of the Management Board of Merko Ehitus, Ivo Volkov.

“The private sector’s outlook on the future and investing has become more positive over the last year and orders for construction service have grown somewhat. Contracts for defence infrastructure and civilian infrastructure also help offset the dearth of the usual orders from the public sector. Our home markets are acting in very different ways. Lithuania continues to stand out with its clearly distinct government support for the economy and the resulting significantly higher consumer confidence and private sector investment appetite. Since the total volumes on the market are still down from the all-time peak, competition between providers is high and margins on signed contracts are very low. It is still a good time to order construction service. Our decision to exit the Norwegian market also stems from our adjustments to the new circumstances. Both the Norwegian and Nordic construction markets are suffering from the familiar effects of inflation, and there are no grounds to expect a rapid improvement,” said Volkov commenting on the construction services business area.

In the first six months of 2024, Merko entered into new contracts worth EUR 140 million and the secured order-book by the end of H1 grew to EUR 438 million. The largest new contracts signed in Q2 were construction of wind farm infrastructure in Telšiai and additional work on NATO training centre infrastructure in Pabrade, Lithuania; in Latvia, the construction of Ignitis solar park; and in Estonia, additional works on the construction of Arter Quarter, construction of Putukaväil in Tallinn and Tallinn city road maintenance.

In Q2 2024, the largest projects under construction were the TKM Group’s logistics centre, and the Hampton by Hilton and Hyatt hotel buildings, Arter Quarter, Estonian Defence Forces buildings on Ämari base, a tram line between Old City Harbour and Rail Baltica Ülemiste passenger terminal and the first stage of Ülemiste multimodal transport junction and the Tõdva highway overpasses, also for Rail Baltica.In Lithuania, the largest construction projects were infrastructure works in the regions of Kelmė and Pagėgiai, a substation in Kelmė and buildings and infrastructure for various NATO training centres.

In the first six months of 2024, Merko delivered 120 apartments and 9 commercial units to buyers, invested a total of EUR 21.3 million into development projects. As of the end of H1, the group companies had 671 unsold apartments which were either ready or under construction, and 81 apartments covered by preliminary sale contracts. Merko launched construction and sales of four new projects this year: a new stage of Veerenni in Tallinn, Õielehe in Jüri, a new stage of Erminurme in Tartu, and Lucavsala in Riga. The largest development projects under construction were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Erminurme in Tartu; Viesturdarzs, Mežpilseta and Magnolijas in Riga and Vilneles Skverai in Vilnius.