Construction, Estonia, Real Estate
International Internet Magazine. Baltic States news & analytics
Wednesday, 24.04.2024, 05:12
Estonia: Merko's FY revenue drops by 1/5 to EUR 327 mln
The management board's proposal for shareholders is to pay
out a dividend of 60 cents a share.
"The decline in annual sales revenue by about one fifth
was expected because of the extra¬ordinarily high comparison base of 2018,
which included the construction of some very large shopping centers in Tallinn
and Riga. The group's smaller secured order book also reflects the situation on
the market: fewer commercial real estate sites are being built because
competition is stiffer, construction prices have risen and financing conditions
have become more complicated," AS Merko Ehitus CEO Andres
Trink said.
By way of comparison, in 2018, the group's revenue and
profit both increased 31.6% on year to respectively 418 mln and 19.3 mln euros.
Merko Ehitus posted revenue of 99 mln euros and a net
profit of 9.3 mln euros for the fourth quarter of 2019, representing a gain by
nearly one-third over the same period a year ago. The revenue generated by the
real estate development business area in the final quarter of the year more
than doubled compared to 2018 and made up approximately 47 % of the group's
total revenue.
The CEO said that the fourth quarter was strong as expected
for Merko. He said professional work by the teams of the group
companies and timely completion of apartment development projects contributed
to the result. The forecasts of group's management were surpassed somewhat as
some apartment development projects were completed earlier than planned and
sales were faster thanks to greater interest from buyers.
The full-year net profit figure was impacted by significantly
higher income tax expenses compared to 2018 due to the payment of dividends.
The group's profit before taxes for the 12 months was 20.3 mln euros,
representing an increase by 2.8 % over the previous year.
The proportion of the real estate development business area
has continued to increase, and in the final quarter of the year it made up
close to 47 % of the group's total revenue. The real estate development
business area's sales revenue was 46.5 mln euros in the fourth quarter,
totaling 70.1 mln euros for the 12 months. During the quarter, Merko
sold a total of 276 apartments, compared with 482 during the entire year,
whereas the respective figures for commercial areas sold were 13 and 24.
"The apartment market in Tallinn, Riga and Vilnius is
stable and our focus continues to be on large development areas where we can
establish an integral residential environment and launch and build development
projects stage by stage based on demand," Trink said.
During 2019, the group invested 87.4 mln euros into new and
ongoing development projects and started construction of a total of 368 new
apartments in the Baltics. The largest projects were the Uus-Veerenni,
Lahekalda and Pikaliiva residential projects in Tallinn, the Gailezers and
Viesturdarzs developments in Riga, and the Vilneles slenis and Rinktines Urban
developments in Vilnius.
The largest projects in progress in the final quarter of the
year in Estonia were the construction of Terminal D parking building at the
Tallinn passenger port, Turi Basic School, the student home for Rakvere
Vocational School and a commercial building at 186 Parnu Road, as well as the
reconstruction of the Aaspere-Haljala road section. In Latvia, the largest
projects in progress were the construction of the Pinki school building and
dormitory, Lidl's logistics centre, Alfa shopping center, and Laima chocolate
factory, as well as the reconstruction of the Riga Technical University Civil
Engineering Faculty building. In Lithuania, the larger projects were the
construction of Neringa Hotel, Quadrum office building, and a private school in
Vilnius.
AS Merko Ehitus group consists of AS Merko Ehitus
Eesti in Estonia, SIA Merks in Latvia, UAB Merko Statyba in
Lithuania and Peritus Entreprenor AS in Norway. Besides providing
construction service as a main contractor, the group's other major area of
activity is apartment development. As at the end of 2019, the group employed
694 people.
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