COMMENTARY FROM MANAGEMENT
In the fourth quarter of 2025, Merko Ehitus generated revenue of EUR 69 million and net profit of EUR 3.2 million; for the full year, revenue was EUR 311 million and net profit EUR 39.9 million. In coordination with the supervisory board, the management board of Merko Ehitus proposes paying a dividend of 1.25 euros per share.
According to the management of Merko Ehitus, the results in 2024 were remarkably strong in terms of both turnover and profit, as contracts signed a few years ago in turbulent market conditions reached completion and various large-scale projects were delivered. In 2025, more typical volumes and revenue structure returned, with real estate development playing a larger role in results. The group's financial position remains solid and net debt is negative.
In 2025, Merko completed construction of two of the largest projects in history: the Arter Quarter in Tallinn and the Pabrade defence campus in Lithuania. Gradually improving consumer confidence and economic growth recorded for several consecutive quarters are reflected above all in increasing demand in the real estate market. Private-sector clients remain cautious in ordering construction services, while tenders are dominated by large public-sector defence infrastructure projects. As the market is extremely concentrated, competition in tenders is strong and margins have been driven down to very low levels.
In 2025, Merko signed new construction contracts worth EUR 363 million, the largest of which were agreements for the Rail Baltica Ülemiste passenger terminal and the Tallinn-Pärnu main line, a hotel and event centre in Pärnu, the Viktor Masing office building in Tallinn, and the construction of foundations for the Augstkalni wind farm in Latvia. The balance of secured order-book work for external clients stood at EUR 467 million at the end of 2025. In 2025, group companies signed new construction contracts in a slightly higher volume than in 2024. As a result of the long-term and thorough preparatory work of our Lithuanian colleagues, Merko concluded largest contracts in the first days of 2026 for the construction of two stages of the Rudninkai defence force campus, which has by now raised portfolio of unfinished work for external clients to a historically highest level of more than 800 million euros.
Companies operating under the Connecto brand, in which Merko holds a financial investment, also made a strong contribution to the group's 2025 results. Connecto's workload has been high over the past couple of years, but the outlook is notably more modest due to the completion of many large-scale projects in 2025 and gradually declining investments in energy infrastructure.
The residential real estate market has taken an upward turn across all our home markets. Compared to 2024, in 2025 Merko handed over more apartments to buyers, signed significantly more pre-sale agreements in Its developments under construction, and launched construction of over three times more apartments, the majority of them in Vilnius, which remains the most active market. In 2025, Merko delivered 358 apartments and 3 commercial units to buyers in Estonia, Latvia and Lithuania and started the construction and sale of 894 apartments and 21 commercial premises, of which 26% are covered by pre-sale agreements. Larger development projects underway in 2025 included Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Õielehe in the settlement of Jüri, and Erminurme and Leedri in Tartu; Lucavsala, Arena Garden Towers and Mežpilseta in Riga; and Vilneles Skverai and Šnipiškiu Urban in Vilnius.
In the fourth quarter of 2025, the larger construction projects in progress included the Tallinn 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, as well as the Rail Baltica Ülemiste passenger terminal and the fourth stage of the Rail Baltica mainline in Harju County and the Tallinn-Pärnu section. In Lithuania, the largest construction projects were wind farm infrastructure in the Pagegiai, Telšiai and Pasvalys districts, as well as various national defence buildings and infrastructure. In Latvia, a student hotel was under construction in Riga and infrastructure facilities at the Augstkalni wind farm.
OVERVIEW OF THE IV QUARTER AND 12 MONTHS RESULTS
PROFITABILITY
2025 12 months' pre-tax profit was EUR 44.8 million and Q4 2025 was EUR 4.6 million (12M 2024: EUR 76.4 million and Q4 2024 was EUR 26.8 million), which brought the pre-tax profit margin to 14.4% (12M 2024: 14.2%).
Net profit attributable to shareholders for 12 months 2025 was EUR 39.9 million (12M 2024: EUR 64.7 million) and for Q4 2025 net profit attributable to shareholders was EUR 3.2 million (Q4 2024: EUR 19.9 million). 12 months net profit margin was 12.8% (12M 2024: 12.0%).
REVENUE
Q4 2025 revenue was EUR 69.1 million (Q4 2024: EUR 160.4 million) and 12 months' revenue was EUR 310.9 million (12M 2024: EUR 539.0 million). 12 months' revenue decreased by 42.3% compared to same period last year. The share of revenue earned outside Estonia in 12 months 2025 was 45.1% (12M 2024: 58.3%).
SECURED ORDER BOOK
As of 31 December 2025, the group's secured order book was EUR 466.9 million (31 December 2024: EUR 340.6 million). In 12 months 2025, group companies signed contracts in the amount of EUR 362.8 million (12M 2024: EUR 338.0 million). In Q4 2025, new contracts were signed in the amount of EUR 40.1 million (Q4 2024: EUR 45.9 million).
REAL ESTATE DEVELOPMENT
In 12 months 2025, the group sold a total of 358 apartments; in 12 months 2024, the group sold 323 apartments. The group earned a revenue of EUR 67.8 million from sale of own developed apartments in 12 months 2025 and EUR 58.9 million in 12 months 2024. In Q4 of 2025 a total of 43 apartments were sold, compared to 129 apartments in Q4 2024, and earned a revenue of EUR 8.1 million from sale of own developed apartments (Q4 2024: EUR 22.9 million).
CASH POSITION
At the end of the reporting period, the group had EUR 41.4 million in cash and cash equivalents, and equity of EUR 260.6 million (62.8% of total assets). Comparable figures as of 31 December 2024 were EUR 91.9 million and EUR 254.3 million (56.9% of total assets), respectively. As of 31 December 2025, the group's net debt was negative EUR 8.3 million (31 December 2024: negative EUR 58.5 million).
PROPOSAL FOR DISTRIBUTION OF PROFITS
The Management Board proposes to the Supervisory Board to distribute to shareholders EUR 22.1 million in dividends (1.25 euros per share) from retained earnings in 2026. This is equivalent to a 55% dividend rate for 2025.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| 2025 12 months | 2024 12 months | 2025 IV quarter | 2024 IV quarter | |
| Revenue | 310,941 | 539,049 | 69,142 | 160,373 |
| Cost of goods sold | (255,081) | (443,162) | (60,332) | (127,565) |
| Gross profit | 55,860 | 95,887 | 8,810 | 32,808 |
| Marketing expenses | (5,823) | (5,030) | (2,070) | (1,664) |
| General and administrative expenses | (17,478) | (21,908) | (4,480) | (6,793) |
| Other operating income | 2,285 | 5,724 | 688 | 759 |
| Other operating expenses | (501) | (2,190) | (230) | 322 |
| Operating profit | 34,343 | 72,483 | 2,718 | 25,432 |
| Finance income/costs | 10,425 | 3,931 | 1,894 | 1,407 |
| incl. finance income/costs from investments in subsidiaries | - | (5,087) | - | (1,968) |
| finance income/costs from joint ventures | 10,381 | 9,951 | 1,895 | 3,317 |
| interest expense | (836) | (1,823) | (225) | (354) |
| foreign exchange gain (loss) | (18) | (948) | (37) | (17) |
| other financial income (expenses) | 898 | 1,838 | 261 | 429 |
| Profit before tax | 44,768 | 76,414 | 4,612 | 26,839 |
| Corporate income tax expense | (4,850) | (11,820) | (1,378) | (6,953) |
| Net profit for financial year | 39,918 | 64,594 | 3,234 | 19,886 |
| incl. net profit attributable to equity holders of the parent | 39,918 | 64,668 | 3,234 | 19,887 |
| net profit attributable to non-controlling interest | - | (74) | - | (1) |
| Other comprehensive income, which can subsequently be classified in the income statement | ||||
| Currency translation differences of foreign entities | 20 | 105 | 31 | (24) |
| Comprehensive income for the period | 39,938 | 64,699 | 3,265 | 19,862 |
| incl. net profit attributable to equity holders of the parent | 39,938 | 64,764 | 3,265 | 19,862 |
| net profit attributable to non-controlling interest | - | (65) | - | - |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 2.26 | 3.65 | 0.18 | 1.12 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 31.12.2025 | 31.12.2024 | |
| ASSETS | ||
| Current assets | ||
| Cash and cash equivalents | 41,424 | 91,879 |
| Short-term deposits | 18,000 | 10,000 |
| Trade and other receivables | 43,658 | 51,419 |
| Prepaid corporate income tax | 1,347 | 270 |
| Inventories | 219,812 | 196,521 |
| 324,241 | 350,089 | |
| Non-current assets | ||
| Investments in joint ventures | 31,957 | 21,571 |
| Other shares and securities | 80 | 80 |
| Other long-term loans and receivables | 20,658 | 40,196 |
| Deferred income tax assets | 2,874 | 5,056 |
| Investment property | 12,395 | 12,606 |
| Property, plant and equipment | 22,117 | 17,147 |
| Intangible assets | 714 | 350 |
| 90,795 | 97,006 | |
| TOTAL ASSETS | 415,036 | 447,095 |
| LIABILITIES | ||
| Current liabilities | ||
| Borrowings | 3,079 | 21,303 |
| Payables and prepayments | 95,920 | 129,786 |
| Income tax liability | 510 | 7,101 |
| Deferred income from government grant | 2 | - |
| Short-term provisions | 10,426 | 7,678 |
| 109,937 | 165,868 | |
| Non-current liabilities | ||
| Long-term borrowings | 30,012 | 12,102 |
| Deferred income tax liability | 7,448 | 6,148 |
| Other long-term payables | 7,073 | 8,719 |
| 44,533 | 26,969 | |
| TOTAL LIABILITIES | 154,470 | 192,837 |
| EQUITY | ||
| Non-controlling interests | - | - |
| Equity attributable to equity holders of the parent | ||
| Share capital | 7,929 | 7,929 |
| Statutory reserve capital | 793 | 793 |
| Currency translation differences | (21) | (41) |
| Retained earnings | 251,865 | 245,577 |
| 260,566 | 254,258 | |
| TOTAL EQUITY | 260,566 | 254,258 |
| TOTAL LIABILITIES AND EQUITY | 415,036 | 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 2025, the group employed 617 people, and the group's revenue for 2025 was EUR 311 million-
