2026 9 Months And III Quarter Consolidated Unaudited Interim Report

(MENAFN- GlobeNewsWire - Nasdaq) COMMENTARY FROM MANAGEMENT

Merko Ehitus generated revenue of EUR 118 million in the third quarter of 2026 and EUR 268 million in the nine months of the year. Net profit amounted to EUR 12.6 million for the third quarter and EUR 25.4 million for the nine months of 2026.

According to the management of Merko Ehitus, real estate development and construction services both contributed equally to group third-quarter results. During the quarter completed and handed over 118 apartments and 18 commercial units to buyers, almost as many as in the first two quarters of the year combined. Merko secured order book remains strong at close to EUR 770 million, and several large projects moved into the active construction phase in the third quarter. Group companies' main task now is to complete the projects under way and keep risks under control.

According to management, the construction market continues to be dominated by the public sector in the construction services business segment, driven by defence and infrastructure procurements, and public sector related contracts also account for the majority of Merko's order book. The rise in fuel and energy prices over the year has taken its toll on the profitability of construction services. Group road construction company has been most affected by rising fuel prices, as it is proportionally the most exposed to fuel prices. In the third quarter, Merko signed new construction contracts worth EUR 22 million, the largest of which was for the Volta 1b residential development in the Krulli Quarter in Tallinn.

In the real estate development segment, according to the group's management, consumer confidence has been edging up in all of Merko's home markets, which has supported growth in the share of apartments sold under pre-sale agreements. As times remain uncertain, management does not predict that this trend will continue. Apartment supply remains high across all markets, giving buyers plenty of choice, which in turn keeps competition between developers intense and puts pressure on margins. This year, the new-build apartment market in Riga has picked up considerably, and group has launched several new development projects there as well.

To focus on core business – construction services and residential real estate development – Merko sold majority shareholding in the companies linked to the large-scale Rūdninkai military campus PPP project in Lithuania in the third quarter. Kapitel acquired a 70% stake in the companies delivering the PPP project and managing and maintaining the completed facilities. Merko retains a 30% minority stake in these companies. As the general contractor, Merko remains responsible for delivering design-and-build contracts worth more than EUR 370 million in total. Engaging an investor helps the group maintain its strong liquidity.

Over the nine months, Merko handed over 238 apartments and 23 commercial units and started construction and sales of 394 apartments and four commercial units. At the end of the third quarter, 1325 apartments were under construction or completed, approximately one third of which were covered by pre-sale agreements. The largest development projects under way in the third quarter of 2026 were Uus-Veerenni, Noblessner and Lahekalda in Tallinn, Õielehe near Tallinn and Leedri in Tartu; Lucavsala, Arena Garden Towers, Magnolijas and Mežpilsēta in Riga; and Vilnelės Skverai and Šnipiškių Urban in Vilnius.

In the third quarter of 2026, major construction projects under way in Estonia included the City Plaza 2 and Viktor Masing House office buildings, the Kullo Hobby Centre, and the Event Centre, the main building named Kasvuhoone, Volta 1b apartment buildings and infrastructure in the Krulli Quarter 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 and the Tallinn–Pärnu section. In Lithuania, the largest projects were wind farm infrastructure in the Pagėgiai district and the Rūdninkai military campus. In Latvia, the group was building military campuses and wind farm infrastructure in Smiltene municipality.

OVERVIEW OF THE III QUARTER AND 9 MONTHS RESULTS

PROFITABILITY
2026 9 months' pre-tax profit was EUR 25.0 million and Q3 2026 was EUR 14.2 million (9M 2025: EUR 40.2 million and Q3 2025 was EUR 16.6 million), which brought the pre-tax profit margin to 9.3% (9M 2025: 16.6%).
Net profit attributable to shareholders for 9 months 2026 was EUR 25.4 million (9M 2025: EUR 36.7 million) and for Q3 2026 net profit attributable to shareholders was EUR 12.6 million (Q3 2025: EUR 15.0 million). 9 months net profit margin was 9.5% (9M 2025: 15.2%).

REVENUE
Q3 2026 revenue was EUR 118.2 million (Q3 2025: EUR 73.9 million) and 9 months' revenue was EUR 268.1 million (9M 2025: EUR 241.8 million). 9 months' revenue increased by 10.9% compared to same period last year. The share of revenue earned outside Estonia in 9 months 2026 was 42.6% (9M 2025: 47.4%).

SECURED ORDER BOOK
As of 30 September 2026, the group's secured order book was EUR 769.1 million (30 September 2025: EUR 486.2 million). In 9 months 2026, group companies signed contracts in the amount of EUR 508.6 million (9M 2025: EUR 322.8 million). In Q3 2026, new contracts were signed in the amount of EUR 22.2 million (Q3 2025: EUR 99.6 million).

REAL ESTATE DEVELOPMENT
In 9 months 2026, the group sold a total of 238 apartments; in 9 months 2025, the group sold 315 apartments. The group earned a revenue of EUR 52.4 million from sale of own developed apartments in 9 months 2026 and EUR 59.7 million in 9 months 2025. In Q3 of 2026 a total of 118 apartments were sold, compared to 93 apartments in Q3 2025, and earned a revenue of EUR 24.7 million from sale of own developed apartments (Q3 2025: EUR 14.9 million).

CASH POSITION
At the end of the reporting period, the group had EUR 55.5 million in cash and cash equivalents, and equity of EUR 263.6 million (54.4% of total assets). Comparable figures as of 30 September 2025 were EUR 34.3 million and EUR 257.3 million (64.4% of total assets), respectively. As of 30 September 2026, the group's net debt was EUR 12.1 million (30 September 2025: negative EUR 8.0 million).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

	2026 9 months	2025 9 months	2026 III quarter	2025 III quarter	2025 12 months
Revenue	268,123	241,799	118,230	73,917	310,941
Cost of goods sold	(234,943)	(194,749)	(102,435)	(55,938)	(255,081)
Gross profit	33,180	47,050	15,795	17,979	55,860
Marketing expenses	(4,119)	(3,753)	(1,395)	(1,052)	(5,823)
General and administrative expenses	(10,785)	(12,998)	(3,496)	(4,251)	(17,478)
Other operating income	2,047	1,597	803	514	2,285
Other operating expenses	(143)	(271)	114	(175)	(501)
Operating profit	20,180	31,625	11,821	13,015	34,343
Finance income/costs	4,847	8,531	2,419	3,630	10,425
incl. finance income/costs from associate and joint ventures	4,876	8,486	2,425	3,642	10,381
interest expense	(620)	(611)	(261)	(216)	(836)
foreign exchange gain (loss)	313	19	137	33	(18)
other financial income (expenses)	278	637	118	171	898
Profit before tax	25,027	40,156	14,240	16,645	44,768
Corporate income tax expense	388	(3,472)	(1,668)	(1,637)	(4,850)
Net profit for financial year	25,415	36,684	12,572	15,008	39,918
Other comprehensive income, which can subsequently be classified in the income statement
Currency translation differences of foreign entities	(253)	(11)	(110)	(18)	20
Comprehensive income for the period	25,162	36,673	12,462	14,990	39,938
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR)	1.44	2.07	0.71	0.85	2.26

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

	30.09.2026	30.09.2025	31.12.2025
ASSETS
Current assets
Cash and cash equivalents	55,510	34,279	41,424
Short-term deposits	3,000	26,000	18,000
Trade and other receivables	71,742	54,537	43,658
Prepaid corporate income tax	696	714	1,347
Inventories	252,394	200,646	219,812
	383,342	316,176	324,241
Non-current assets
Investments in associate and joint ventures	35,155	30,060	31,957
Other shares and securities	80	80	80
Other long-term loans and receivables	29,944	18,281	20,658
Deferred income tax assets	2,873	3,594	2,874
Investment property	11,127	12,426	12,395
Property, plant and equipment	21,573	18,306	22,117
Intangible assets	632	703	714
	101,384	83,450	90,795
TOTAL ASSETS	484,726	399,626	415,036
LIABILITIES
Current liabilities
Borrowings	7,959	9,549	3,079
Payables and prepayments	127,219	92,325	95,920
Income tax liability	797	31	510
Deferred income from government grant	-	-	2
Short-term provisions	12,819	8,978	10,426
	148,794	110,883	109,937
Non-current liabilities
Long-term borrowings	59,670	16,710	30,012
Deferred income tax liability	4,164	6,773	7,448
Other long-term payables	8,495	7,959	7,073
	72,329	31,442	44,533
TOTAL LIABILITIES	221,123	142,325	154,470
EQUITY
Share capital	7,929	7,929	7,929
Statutory reserve capital	793	793	793
Currency translation differences	(274)	(52)	(21)
Retained earnings	255,155	248,631	251,865
TOTAL EQUITY	263,603	257,301	260,566
TOTAL LIABILITIES AND EQUITY	484,726	399,626	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
...

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.

Attachment

• Merko_Ehitus_2026_9M_interim_report

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