Construction, Estonia, Good for Business, Real Estate

International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 13:55

Estonian Merko's net profit grew by 13.9% in Q1

BC, Tallinn, 07.05.2015.Print version
Estonian construction company Merko Ehitus reported to the Tallinn Stock Exchange that its net profit in the first three months of the year 2015 was EUR 0.8 million, having increased by 13.9% compared to the same period last year, reports LETA.

In the first quarter of 2015, Merko Ehitus had sales revenue of EUR 45.6 million (first 3 months of 2014: EUR 48.9 million), of which 41.8% was earned outside Estonia. The company was satisfied with the growth of sales revenue from construction services in Latvia; in the 3 months of 2015 the share of Latvian revenue in the group’s revenue has increased to almost 37%.

 

Lithuanian revenue from construction services stayed on par with the figure for the first quarter last year. The volume of new construction contracts cannot be considered satisfactory – in the first quarter, Merko Ehitus signed EUR 22.4 million in new construction contracts compared to EUR 48.6 million in the same period in 2014.

 

The low number of new orders has led to a bidding war on the market, which is putting pressure on margins and due to which greater risks are being taken in construction contracts by both builders and customers. Merko Ehitus’s gross margin for the first quarter was 7.8% (3 months of 2014: 8.1%) and profit before taxes was EUR 0.8 million (3 months of 2014: EUR 1.1 million). Net profit margin grew to 1.8% (3 months of 2014: 1.5%) and net profit for the first quarter of 2015 was EUR 0.8 million (3 months of 2014: EUR 0.7 million).

 

The share of the real estate development segment increased in the first quarter of 2015 to make up 24.3% of the group’s total revenue (3 months of 2014: 21.1%). In the first quarter of this year, the group has invested EUR 10.7 million into new and ongoing development projects, and the total investment planned for 2015 into apartment development projects in the Baltic States amounts to EUR 45-50 million, depending on the performance of the Baltic apartment market, currently supported by low interest rates. In 2015, the group is prepared to launch the construction of 450-500 new apartments in the Baltic States.

 

In the first quarter, the group sold 62 apartments compared to 99 in the same period last year.

 

Merko said that the results posted by the Merko Ehitus group in the first quarter of 2015 are in line with expectations and reflect developments on the Baltic construction market in 2014 – a lower volume of orders and pressure on margins from price competition – which will continue to have an effect in 2015 and likely in 2016 as well.






Search site