Merko Ehitus posts revenue of EUR 266 million and net profit of EUR 17 million for first nine months of 2022
Revenue for Merko Ehitus amounted to EUR 110 million in Q3 2022 and the revenue for the first nine months of the year to EUR 266 million, while figures for net profit stood at EUR 9.8 million in Q3 and EUR 17 million for nine months. During the first nine months of this year, Merko has delivered more than 450 new apartments to buyers.
“The results for Q3 reflect the growth of investments made into apartment development in recent years, and balanced management of the construction projects portfolio in a complicated market situation,“ said the Chairman of the Management Board of AS Merko Ehitus, Andres Trink, in commenting on the group’s results.
Trink said the outlook of the next 12 months and the years ahead for the construction sector have worsened suddenly during the current year. “The slowing of inflation and the expected adjustment by companies and households to the high prices of energy has not yet taken place. In addition, interest rates continue rising rapidly. Both customers for major construction projects and the apartment market are gripped by great uncertainty. In conditions of high inflation, pressure on prices continues despite of the fact that demand has decreased. Since processes in construction and real estate development take time, the impact of the current economic and market situation will manifest in the financial results for our sectors of activity in full in 12–24 months.“
In the nine months of the current year, the group companies entered into new construction contracts worth EUR 290 million and the balance of secured order book stood at EUR 341 million as of the end of September (respectively EUR 273 million and EUR 314 million in 2021). “Our construction orders portfolio is currently strong, which will help us get through the recessionary period of the next few years with a bit less pain. The outlook for new construction orders on the market as a whole is extremely unclear, but at the same time, we are well-positioned for investments into the energy sector,” added Trink.
In the first nine months of this year, Merko delivered 456 new apartments and four commercial units to buyers (first 9 months of 2021: 197 apartments and 7 commercial units). “Despite the exceedingly complicated situation in the economy, we have continued investments into apartment development and launched new development projects, albeit at a more moderate pace than years past. In conditions of rapid inflation, the construction will not become cheaper in the future,” said Trink concerning apartment developments.
During the first nine months of this year, Merko launched four new development projects with approximately 280 apartments. As of the end of Q3, there were 1,617 apartments under construction by the group companies, of which more than half have preliminary sale contracts. The largest apartment developments were Uus-Veerenni, Noblessneri and Lahekalda in Tallinn; Erminurme in Tartu; Viesturdarzs, Mežpilseta and Magnolijas in Riga, and Vilneles Skverai in Vilnius.
In Q3 of 2022, the largest sites under construction in Estonia are the third phase of the Mustamäe medical campus of the North-Estonia Medical Centre, Pelgulinna and Rae state gymnasiums, the Arter quarter, 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 included the Orkla wafer and biscuit production plant, GUSTAVS business centre, Elemental Skanste office buildings, NATO facilities in Adaži; in Lithuania, several wind farm infrastructures and a car service centre in Vilnius.