COMMENTARY FROM MANAGEMENT
Merko Ehitus generated revenue of EUR 93 million in the second quarter of 2026 and EUR 150 million in the first half of the year. Net profit amounted to EUR 8.5 million for the second quarter and EUR 12.8 million for the first six months of 2026. As of the end of the first half of the year, the company's secured order-book reached an all-time high of EUR 836 million.
According to the management of Merko Ehitus, there was an increase in activity in both the construction services and development segment in the second quarter. Several large-scale projects secured last year entered a more active construction phase, which was reflected in Merko's revenue figures. In addition, more than twice as many apartments were delivered to customers in the second quarter as in the first quarter of this year. The increase in construction input prices that anticipated in the first quarter has materialised, and there are currently no developments in the economy or global politics that would suggest any easing of price pressures. There were no unexpected changes in the construction and real estate markets during the second quarter, and all of Merko's home markets performed in line with expectations.
In early July, completed all preparatory stages required for the development of the Rudninkai defence force campus project. The contract entered into full force, and construction activities have now commenced in full scale. The construction cost of the two phases exceeds 370 million euros in total, and the project's contribution to revenue will increase significantly in the coming quarters. In the second quarter, signed new construction contracts worth approximately 80 million euros, including the main building, an event center and infrastructure in Krulli quarter in Tallinn. As of the end of the first half of the year, the group's companies secured order-book reached an all-time high of EUR 836 million.
Following a prolonged period of growth, activity in Vilnius's new apartment market has moderated somewhat, while the pace of signing new presale agreements has picked up in Riga. During the second quarter, group launched the construction of more than 160 apartments in Riga, including the Petersala residential development, which incorporates architecturally significant heritage buildings, as well as the second phase of the Magnolijas development. The market for new residential developments in Tallinn is moving at a pace similar to last year. Across all Merko's home markets, customers remain highly price-sensitive, with the majority of transactions involving more affordable apartments.
During the first six months of the year, Merko delivered 120 apartments and five commercial units to buyers and launched the construction and sales of 204 apartments and four commercial units. As of the end of the first half of the year, Merko had a total of 1,253 apartments under construction and completed, of which approximately 40% are covered by presale agreements. In the second quarter of 2026, major development projects included Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Õielehe near Tallinn, and Erminurme and Leedri in Tartu; Lucavsala, Arena Garden Towers and Mežpilseta in Riga; and Vilneles Skverai and Šnipiškiu Urban in Vilnius.
In Estonia, the group's larger construction projects in progress during the second quarter of 2026 included the City Plaza 2 and Viktor Masing office buildings, the Kullo Hobby Centre in Tallinn, the National Defence Building in Tartu, a hotel and event centre in Pärnu, the Rail Baltica Ülemiste passenger terminal, and the fourth stage of the Rail Baltica main line in Harju County, including the Tallinn-Pärnu section. In Lithuania, the major projects under construction were wind farm infrastructure facilities in the Pagegiai and Telšiai districts and the Rudninkai military campus. In Latvia, the group was engaged in the construction of military campuses, a student hotel in Riga, and wind farm infrastructure facilities in the Smiltene municipality.
OVERVIEW OF THE II QUARTER AND 6 MONTHS RESULTS
PROFITABILITY
2026 6 months' pre-tax profit was EUR 10.8 million and Q2 2026 was EUR 9.1 million (6M 2025: EUR 23.5 million and Q2 2025 was EUR 11.9 million), which brought the pre-tax profit margin to 7.2% (6M 2025: 14.0%).
Net profit attributable to shareholders for 6 months 2026 was EUR 12.8 million (6M 2025: EUR 21.7 million) and for Q2 2026 net profit attributable to shareholders was EUR 8.5 million (Q2 2025: EUR 11.2 million). 6 months net profit margin was 8.6% (6M 2025: 12.9%).
REVENUE
Q2 2026 revenue was EUR 92.7 million (Q2 2025: EUR 82.6 million) and 6 months' revenue was EUR 149.9 million (6M 2025: EUR 167.9 million). 6 months' revenue decreased by 10.7% compared to same period last year. The share of revenue earned outside Estonia in 6 months 2026 was 41.2% (6M 2025: 43.8%).
SECURED ORDER BOOK
As of 30 June 2026, the group's secured order book was EUR 835.7 million (30 June 2025: EUR 443.8 million). In 6 months 2026, group companies signed contracts in the amount of EUR 486.4 million (6M 2025: EUR 223.1 million). In Q2 2026, new contracts were signed in the amount of EUR 79.6 million (Q2 2025: EUR 172.6 million).
REAL ESTATE DEVELOPMENT
In 6 months 2026, the group sold a total of 120 apartments; in 6 months 2025, the group sold 222 apartments. The group earned a revenue of EUR 27.6 million from sale of own developed apartments in 6 months 2026 and EUR 44.9 million in 6 months 2025. In Q2 of 2026 a total of 84 apartments were sold, compared to 101 apartments in Q2 2025, and earned a revenue of EUR 20.6 million from sale of own developed apartments (Q2 2025: EUR 20.2 million).
CASH POSITION
At the end of the reporting period, the group had EUR 39.6 million in cash and cash equivalents, and equity of EUR 251.1 million (57.4% of total assets). Comparable figures as of 30 June 2025 were EUR 25.9 million and EUR 242.3 million (60.1% of total assets), respectively. As of 30 June 2026, the group's net debt was EUR 29.6 million (30 June 2025: negative EUR 1.1 million).
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
| 2026 6 months | 2025 6 months | 2026 II quarter | 2025 II quarter | 2025 12 months | |
| Revenue | 149,893 | 167,882 | 92,670 | 82,646 | 310,941 |
| Cost of goods sold | (132,508) | (138,811) | (80,761) | (68,488) | (255,081) |
| Gross profit | 17,385 | 29,071 | 11,909 | 14,158 | 55,860 |
| Marketing expenses | (2,724) | (2,701) | (1,395) | (1,426) | (5,823) |
| General and administrative expenses | (7,289) | (8,747) | (4,072) | (4,472) | (17,478) |
| Other operating income | 1,244 | 1,083 | 736 | 522 | 2,285 |
| Other operating expenses | (257) | (96) | (135) | (55) | (501) |
| Operating profit | 8,359 | 18,610 | 7,043 | 8,727 | 34,343 |
| Finance income/costs | 2,428 | 4,901 | 2,045 | 3,184 | 10,425 |
| incl. finance income/costs from joint ventures | 2,451 | 4,844 | 2,133 | 3,343 | 10,381 |
| interest expense | (359) | (395) | (186) | (185) | (836) |
| foreign exchange gain (loss) | 176 | (14) | (28) | (129) | (18) |
| other financial income (expenses) | 160 | 466 | 126 | 155 | 898 |
| Profit before tax | 10,787 | 23,511 | 9,088 | 11,911 | 44,768 |
| Corporate income tax expense | 2,056 | (1,835) | (588) | (695) | (4,850) |
| Net profit for financial year | 12,843 | 21,676 | 8,500 | 11,216 | 39,918 |
| Other comprehensive income, which can subsequently be classified in the income statement | |||||
| Currency translation differences of foreign entities | (143) | 7 | 22 | 66 | 20 |
| Comprehensive income for the period | 12,700 | 21,683 | 8,522 | 11,282 | 39,938 |
| Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 0.73 | 1.22 | 0.48 | 0.63 | 2.26 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
| 30.06.2026 | 30.06.2025 | 31.12.2025 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 39,593 | 25,862 | 41,424 |
| Short-term deposits | 6,000 | 23,000 | 18,000 |
| Trade and other receivables | 59,491 | 75,989 | 43,658 |
| Prepaid corporate income tax | 486 | 934 | 1,347 |
| Inventories | 245,853 | 196,552 | 219,812 |
| 351,423 | 322,337 | 324,241 | |
| Non-current assets | |||
| Investments in joint ventures | 29,408 | 26,415 | 31,957 |
| Other shares and securities | 80 | 80 | 80 |
| Other long-term loans and receivables | 20,109 | 18,645 | 20,658 |
| Deferred income tax assets | 3,221 | 4,789 | 2,874 |
| Investment property | 11,174 | 12,475 | 12,395 |
| Property, plant and equipment | 21,770 | 18,171 | 22,117 |
| Intangible assets | 669 | 593 | 714 |
| 86,431 | 81,168 | 90,795 | |
| TOTAL ASSETS | 437,854 | 403,505 | 415,036 |
| LIABILITIES | |||
| Current liabilities | |||
| Borrowings | 7,830 | 9,712 | 3,079 |
| Payables and prepayments | 95,921 | 112,484 | 95,920 |
| Income tax liability | 111 | 112 | 510 |
| Deferred income from government grant | 5 | - | 2 |
| Short-term provisions | 11,494 | 9,165 | 10,426 |
| 115,361 | 131,473 | 109,937 | |
| Non-current liabilities | |||
| Long-term borrowings | 61,339 | 15,018 | 30,012 |
| Deferred income tax liability | 3,923 | 6,623 | 7,448 |
| Other long-term payables | 6,090 | 8,080 | 7,073 |
| 71,352 | 29,721 | 44,533 | |
| TOTAL LIABILITIES | 186,713 | 161,194 | 154,470 |
| EQUITY | |||
| Share capital | 7,929 | 7,929 | 7,929 |
| Statutory reserve capital | 793 | 793 | 793 |
| Currency translation differences | (164) | (34) | (21) |
| Retained earnings | 242,583 | 233,623 | 251,865 |
| TOTAL EQUITY | 251,141 | 242,311 | 260,566 |
| TOTAL LIABILITIES AND EQUITY | 437,854 | 403,505 | 415,036 |
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 613 people, and the group's revenue for 2025 was EUR 311 million-
