COMMENTARY FROM MANAGEMENT
Merko Ehitus generated revenue of EUR 74 million in the third quarter of 2025 and EUR 242 million in the first 9 months of the year. Net profit for Q3 amounted to EUR 15.0 million, while net profit for the 9-month period was EUR 36.7 million. So far this year, Merko has handed over 55% more apartments and commercial premises to buyers than in the first nine months of last year.
According to the management of Merko Ehitus, the third quarter, some of the most significant construction projects in recent times and the largest in Merko's history were completed - the Arter quarter together with the interior works of the Swedbank headquarters in Tallinn and the Pabrade defence campus in Lithuania. As a result, group is returning to its more usual revenue structure. During the first nine months of this year, the share of real estate development increased and accounted for more than a quarter of sales revenue. Consequently, the operating profit margin has also improved.
The real estate market remains most active in Lithuania, while year-on-year conditions have improved in Estonia, and Latvia continues on a slightly upward trend. The market recovery is well illustrated by the fact that, in a nine-month comparison, group companies have handed over more than 55% more apartments and commercial units to buyers. The volume of apartments under construction and completed has slightly decreased compared to the end of the second quarter of this year, and half of them are located in Vilnius, which has the most active market. Management continues to forecast real estate market developments hand in hand with changes in consumer confidence.
In the construction market, there are few tenders and mostly they involve large-scale works. Competition remains extremely intense and, as a result, service margins are low. This year and last year, Merko companies have signed several large-scale contracts related to the construction of Rail Baltica, including Estonia's largest alliance contract as part of an international consortium. Due to the nature of these contracts, where a significant amount of time is spent on design, actual construction will begin in the coming quarters and will be reflected in sales revenue accordingly. The volume of unfinished construction work in the group is at a historical high.
The group's financial position is strong, and net debt is negative. Joint ventures involved in the construction and maintenance of energy infrastructure, Connecto Infra and Connecto Eesti, continue to contribute strongly to the results. For Merko, these are financial investments, and the revenue of these companies is not reflected in Merko's consolidated sales revenue. Connecto has a high volume of work due to significant investments directed into the sector, but many large-scale projects in this sector are also nearing completion, and network operators' investment plans are expected to decline in the foreseeable future.
In the first nine months of 2025, Merko signed new construction contracts worth EUR 323 million, the largest of which were the Rail Baltica Ülemiste terminal in Tallinn, the Rail Baltica mainline section from Tallinn to Pärnu, a hotel and event centre in Pärnu, and the construction of foundations and infrastructure for the Augstkalni wind farm in Latvia. As of the end of the third quarter, the balance of secured order-book for external clients amounted to EUR 486 million.
During the nine months of 2025, Merko handed over 315 apartments and three commercial units to buyers in Estonia, Latvia, and Lithuania. In the same period, Merko started the construction and sale of 771 new apartments and 21 commercial units, nearly two-thirds of them in the Šnipiškiu Urban and Vilneles Skverai projects in Vilnius. As of the end of the third quarter, the balance sheet included 1,089 apartments, of which 19% were covered by pre-sale agreements. The largest ongoing development projects were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Õielehe in Jüri, and Erminurme in Tartu; Lucavsala, Arena Garden Towers and Mežpilseta in Riga; and Vilneles Skverai and Šnipiškiu Urban in Vilnius.
In the third quarter of 2025, the largest construction sites were the Hyatt hotel building, the Kullo Hobby Centre and the City Plaza 2 office building in Tallinn, the National Defence Building in Tartu, and the hotel and event centre in Pärnu, the Rail Baltica Ülemiste joint terminal, and the fourth stage of the Rail Baltica mainline in Harju County and the Tallinn-Pärnu section. In Lithuania, the largest construction sites were wind farm infrastructure in the Pagegiai, Telšiai and Pasvalys regions, as well as various national defence buildings and infrastructure. In Latvia, construction is underway on a solar power plant in Varme Parish, a student hotel in Riga, and infrastructure in Augstkalni wind farm.
OVERVIEW OF THE III QUARTER AND 9 MONTHS RESULTS
PROFITABILITY
2025 9 months' pre-tax profit was EUR 40.2 million and Q3 2025 was EUR 16.6 million (9M 2024: EUR 49.6 million and Q3 2024 was EUR 31.3 million), which brought the pre-tax profit margin to 16.6% (9M 2024: 13.1%).
Net profit attributable to shareholders for 9 months 2025 was EUR 36.7 million (9M 2024: EUR 44.8 million) and for Q3 2025 net profit attributable to shareholders was EUR 15.0 million (Q3 2024: EUR 27.3 million). 9 months net profit margin was 15.2% (9M 2024: 11.8%).
REVENUE
Q3 2025 revenue was EUR 73.9 million (Q3 2024: EUR 175.1 million) and 9 months' revenue was EUR 241.8 million (9M 2024: EUR 378.7 million). 9 months' revenue decreased by 36.1% compared to same period last year. The share of revenue earned outside Estonia in 9 months 2025 was 47.4% (9M 2024: 60.1%).
SECURED ORDER BOOK
As of 30 September 2025, the group's secured order book was EUR 486.2 million (30 September 2024: EUR 430.9 million). In 9 months 2025, group companies signed contracts in the amount of EUR 322.8 million (9M 2024: EUR 292.1 million). In Q3 2025, new contracts were signed in the amount of EUR 99.6 million (Q3 2024: EUR 152.6 million).
REAL ESTATE DEVELOPMENT
In 9 months 2025, the group sold a total of 315 apartments; in 9 months 2024, the group sold 194 apartments. The group earned a revenue of EUR 59.7 million from sale of own developed apartments in 9 months 2025 and EUR 36.0 million in 9 months 2024. In Q3 of 2025 a total of 93 apartments were sold, compared to 74 apartments in Q3 2024, and earned a revenue of EUR 14.9 million from sale of own developed apartments (Q3 2024: EUR 14.6 million).
CASH POSITION
At the end of the reporting period, the group had EUR 34.3 million in cash and cash equivalents, and equity of EUR 257.3 million (64.4% of total assets). Comparable figures as of 30 September 2024 were EUR 61.1 million and EUR 234.6 million (51.3% of total assets), respectively. As of 30 September 2025, the group's net debt was negative EUR 8.0 million (30 September 2024: negative EUR 22.2 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| 2025 9 months | 2024 9 months | 2025 III quarter | 2024 III quarter | 2024 12 months | |
| Revenue | 241,799 | 378,676 | 73,917 | 175,108 | 539,049 |
| Cost of goods sold | (194,749) | (315,597) | (55,938) | (135,738) | (443,162) |
| Gross profit | 47,050 | 63,079 | 17,979 | 39,370 | 95,887 |
| Marketing expenses | (3,753) | (3,366) | (1,052) | (1,073) | (5,030) |
| General and administrative expenses | (12,998) | (15,115) | (4,251) | (6,485) | (21,908) |
| Other operating income | 1,597 | 4,965 | 514 | 572 | 5,724 |
| Other operating expenses | (271) | (2,512) | (175) | (46) | (2,190) |
| Operating profit | 31,625 | 47,051 | 13,015 | 32,338 | 72,483 |
| Finance income/costs | 8,531 | 2,524 | 3,630 | (1,071) | 3,931 |
| incl. finance income/costs from investments in subsidiaries | - | (3,119) | - | (3,119) | (5,087) |
| finance income/costs from joint ventures | 8,486 | 6,634 | 3,642 | 2,979 | 9,951 |
| interest expense | (611) | (1,469) | (216) | (353) | (1,823) |
| foreign exchange gain (loss) | 19 | (931) | 33 | (875) | (948) |
| other financial income (expenses) | 637 | 1,409 | 171 | 297 | 1,838 |
| Profit before tax | 40,156 | 49,575 | 16,645 | 31,267 | 76,414 |
| Corporate income tax expense | (3,472) | (4,867) | (1,637) | (4,004) | (11,820) |
| Net profit for financial year | 36,684 | 44,708 | 15,008 | 27,263 | 64,594 |
| incl. net profit attributable to equity holders of the parent | 36,684 | 44,781 | 15,008 | 27,302 | 64,668 |
| net profit attributable to non-controlling interest | - | (73) | - | (39) | (74) |
| Other comprehensive income, which can subsequently be classified in the income statement | |||||
| Currency translation differences of foreign entities | (11) | 129 | (18) | 105 | 105 |
| Comprehensive income for the period | 36,673 | 44,837 | 14,990 | 27,368 | 64,699 |
| incl. net profit attributable to equity holders of the parent | 36,673 | 44,902 | 14,990 | 27,401 | 64,764 |
| net profit attributable to non-controlling interest | - | (65) | - | (33) | (65) |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 2.07 | 2.53 | 0.85 | 1.54 | 3.65 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 30.09.2025 | 30.09.2024 | 31.12.2024 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 34,279 | 61,115 | 91,879 |
| Short-term deposits | 26,000 | 5,000 | 10,000 |
| Trade and other receivables | 54,537 | 108,930 | 51,419 |
| Prepaid corporate income tax | 714 | 377 | 270 |
| Inventories | 200,646 | 199,628 | 196,521 |
| 316,176 | 375,050 | 350,089 | |
| Non-current assets | |||
| Investments in joint ventures | 30,060 | 25,549 | 21,571 |
| Other shares and securities | 80 | 80 | 80 |
| Other long-term loans and receivables | 18,281 | 21,580 | 40,196 |
| Deferred income tax assets | 3,594 | 5,849 | 5,056 |
| Investment property | 12,426 | 12,645 | 12,606 |
| Property, plant and equipment | 18,306 | 16,609 | 17,147 |
| Intangible assets | 703 | 466 | 350 |
| 83,450 | 82,778 | 97,006 | |
| TOTAL ASSETS | 399,626 | 457,828 | 447,095 |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 9,549 | 11,541 | 21,303 |
| Payables and prepayments | 92,325 | 161,699 | 129,786 |
| Income tax liability | 31 | 6,838 | 7,101 |
| Short-term provisions | 8,978 | 7,325 | 7,678 |
| 110,883 | 187,403 | 165,868 | |
| Non-current liabilities | |||
| Long-term borrowings | 16,710 | 27,357 | 12,102 |
| Deferred income tax liability | 6,773 | 1,715 | 6,148 |
| Other long-term payables | 7,959 | 6,925 | 8,719 |
| 31,442 | 35,997 | 26,969 | |
| TOTAL LIABILITIES | 142,325 | 223,400 | 192,837 |
| EQUITY | |||
| Non-controlling interests | - | (220) | - |
| Equity attributable to equity holders of the parent | |||
| Share capital | 7,929 | 7,929 | 7,929 |
| Statutory reserve capital | 793 | 793 | 793 |
| Currency translation differences | (52) | (16) | (41) |
| Retained earnings | 248,631 | 225,942 | 245,577 |
| 257,301 | 234,648 | 254,258 | |
| TOTAL EQUITY | 257,301 | 234,428 | 254,258 |
| TOTAL LIABILITIES AND EQUITY | 399,626 | 457,828 | 447,095 |
Interim report is attached to the announcement and is also published on NASDAQ Tallinn and Merko's web page (group.merko.ee).
Urmas Somelar
Head of Finance
AS Merko Ehitus
+372 650 1250
urmas.somelar@merko.ee
AS Merko Ehitus (group.merko.ee) group companies construct buildings and infrastructure and develop real estate. We create a better living environment and build the future. We operate in Estonia, Latvia and Lithuania. As at the end of 2024, the group employed 605 people, and the group's revenue for 2024 was EUR 539 million.
