2025 12 Months And IV Quarter Consolidated Unaudited Interim Report

2026-02-05 01:01:56

(MENAFN- GlobeNewsWire - Nasdaq) 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 Pabradė 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 Rūdninkai 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 Mežpilsēta in Riga; and Vilnelės Skverai and Šnipiškių 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 Pagėgiai, 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 merko ).

Urmas Somelar
Head of Finance
AS Merko Ehitus
+372 650 1250
...

AS Merko Ehitus ) 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.

Attachment

Merko_Ehitus_2025_12M_interim_report

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