Baltic, Construction, Real Estate, Transport

"The goal of the coming years is to boost our presence and market share in the Baltic countries," Roben said. "We see little need for acquisitions inside Estonia as there isn't much that we would need to add to our competencies here."

Construction volumes shrank 54% in Lithuania, 48% in Latvia and 30% in Estonia last year after the global credit freeze and spending cuts by their governments worsened the region's recession, which was sparked by the end of a debt-financed property bubble.

Estonia's construction volumes may fall a further 10% this year and start to recover next year, while Latvia and Lithuania will trail Estonian developments by about a year, Roben said.

"As the company's balance sheet is strong, expansion via acquisitions in neighboring countries would be very much welcome as conditions for it are certainly better than during the boom," said Risto Hunt, an analyst with Swedbank in Tallinn. Hunt said he may raise his price estimate for Merko, which is about 15% higher than the present market price.

Merko shares gained 0.3% at open in Tallinn to 6.79 euros. It has risen 35% this year, compared with a gain of 38% for the OMX Tallinn index.

There has been some "easing" in lenders' attitudes toward the construction industry in Estonia over the last six months, while banks remain "very stiff" in Latvia and Lithuania, Roben said.

Merko, which had 761 million kroons in cash and deposits at the end of last year, seeks to benefit from the situation by offering co-financing to both private and public sector clients, Roben said.

Merko earned 69% of its revenue in Estonia last year. It saw sales at its Lithuanian unit shrink more than 90% to 70.9 million kroons. The company expects to see "positive changes" after replacing its top management at the unit last year and increasing cooperation across Baltic units "already from the bidding phase," Roben said.

The company, which competes with Tallinn-based Nordecon International, and the local units of Sweden's Skanska, and Finland's YIT, last month reported 2009 net income shrank 61% to 114 million kroons as revenue slumped 32% to 3.2 billion kroons.