Published: 2021-05-06 07:00:00 CEST
Merko Ehitus
Quarterly report

2021 3 months consolidated unaudited interim report

COMMENTARY FROM MANAGEMENT

In Q1 2021, Merko Ehitus posted revenue of EUR 60 million and net profit of EUR 3.4 million, increasing by 7% and 67%, respectively, compared to the previous year. In three months, Merko sold 90 apartments and started construction of more than 560 apartments. The volume of the new construction contracts and secured order book also increased in the first quarter.

The management of Merko Ehitus is satisfied with the financial results of the first quarter. Despite the lack of new commercial real estate projects, the construction market in the Baltic Republics is currently quite active. At the same time, prospects remain unclear due to the continuing pandemic and the global rise in material prices.

In the first quarter, Merko sold 90 apartments in Tallinn, Tartu, Riga and Vilnius. The apartment market is relatively active in all three Baltic capitals. In the first quarter Merko group launched construction work on six development projects with a total of 567 apartments and 20 commercial premises. Most of the apartments under construction and for sale today will be completed in 2022. Merko’s largest apartment development projects were Noblessner, Uus-Veerenni, Metsatuka, Lahekalda and Pikaliiva, in Tallinn; Gaiļezers and Viesturdārzs, in Riga; and Vilneles Skverai, in Vilnius.

In Q1 2021, Merko entered into new contracts worth 97 million euros, the largest of which were for the construction of the second development phase of Noblessner and the Liivalaia Quarter, in Estonia, and for the construction of Tondiraba Park. The group’s companies signed in Latvia a contract for the construction of Kauguri City Park and Youth House, as well as in Lithuania a production building in Kaunas and a car maintenance centre in Vilnius. As at the end of the first quarter, the secured order book increased by 45% year-on-year to 281 million euros.
  
In the first quarter, the largest objects in Estonia were the third development phase of the Mustamäe medical campus of the North-Estonia Medical Centre, the Tallinn School of Music and Ballet, the renovation of the Nordic Hotel Forum and Tallink City Hotel, and the design and construction of infrastructure of the Republic of Estonia’s southeast land border. In Latvia, the construction of the Orkla waffle and biscuit factory, in Ādaži, and the reconstruction of the Riga University of Technology faculty building were in progress; in Lithuania, construction of wind farm infrastructure facilities in the Telšiai district, the Kaunas district police headquarters building, and NATO barracks were in progress.

OVERVIEW OF THE 3 MONTHS RESULTS

PROFITABILITY
2021 3 months’ profit before tax was EUR 3.7 million (3M 2020: EUR 2.1 million), which brought the profit before tax margin to 6.2% (3M 2020: 3.7%).
Net profit attributable to equity holders of the parent in 3 months 2021 was EUR 3.4 million (3M 2020: EUR 2.0 million) and 3 months net profit margin was 5.6% (3M 2020: 3.6%).

REVENUE
2021 3 months’ revenue was EUR 60.1 million (3M 2020: EUR 55.9 million). 3 months’ revenue increased by 7.6% compared to same period last year. The share of revenue earned outside Estonia in 3 months 2021 was 36.9% (3M 2020: 53.5%).

SECURED ORDER BOOK
As at 31 March 2021, the group’s secured order book was EUR 281.2 million (31 March 2020: EUR 193.0 million). In 3 months 2021, group companies signed new contracts in the amount of EUR 97.4 million (3M 2020: EUR 87.2 million).

REAL ESTATE DEVELOPMENT
In 3 months 2021, the group sold a total of 90 apartments (incl. 1 apartments in a joint venture); in 3 months 2020, the group sold 133 apartments (incl. 2 apartments in a joint venture). The group earned a revenue of EUR 14.8 million from sale of own developed apartments in 3 months 2021 and EUR 18.6 million in 3 months 2020.

CASH POSITION
At the end of the reporting period, the group had EUR 54.8 million in cash and cash equivalents, and equity of EUR 156.6 million (58.1% of total assets). Comparable figures as at 31 March 2020 were EUR 37.1 million and EUR 132.2 million (45.7% of total assets), respectively. As at 31 March 2021, the group’s net debt was EUR -22.4 million (negative) (31 March 2020: EUR 29.8 million).

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros

  2021
3 months
2020
3 months
2020
12 months
Revenue 60,107 55,872 315,918
Cost of goods sold (53,133) (50,398) (272,169)
Gross profit 6,974 5,474 43,749
       
Marketing expenses (947) (948) (4,212)
General and administrative expenses (2,715) (2,805) (13,412)
Other operating income 675 508 2,320
Other operating expenses (54) (63) (2,979)
Operating profit 3,933 2,166 25,466
       
Finance income/costs (184) (99) (1,009)
incl. finance income/costs from joint venture 7 90 (144)
interest expense (146) (172) (719)
foreign exchange gain (loss) - - (7)
other financial income (expenses) (45) (17) (139)
Profit before tax 3,749 2,067 24,457
       
Corporate income tax expense (429) (138) (1,954)
       
Net profit for financial year 3,320 1,929 22,503
incl. net profit attributable to equity holders of the parent 3,368 2,019 22,994
net profit attributable to non-controlling interest (48) (90) (491)
Other comprehensive income, which can subsequently be classified in the income statement      
Currency translation differences of foreign entities 23 (188) (115)
Comprehensive income for the period 3,343 1,741 22,388
incl. net profit attributable to equity holders of the parent 3,392 1,823 22,890
net profit attributable to non-controlling interest (49) (82) (502)
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 0.19 0.11 1.30

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros

  31.03.2021 31.03.2020 31.12.2020
ASSETS      
Current assets      
Cash and cash equivalents 54,792 37,056 47,480
Trade and other receivables 35,362 42,133 32,657
Prepaid corporate income tax 320 91 306
Inventories 126,748 168,833 126,332
  217,222 248,113 206,775
Non-current assets      
Investments in joint venture 2,361 2,588 2,354
Other long-term loans and receivables 20,457 11,991 17,979
Deferred income tax assets 623 - 653
Investment property 13,897 14,021 13,922
Property, plant and equipment 14,484 11,699 14,521
Intangible assets 721 724 711
  52,543 41,023 50,140
       
TOTAL ASSETS 269,765 289,136 256,915
       
LIABILITIES      
Current liabilities      
Borrowings 13,626 21,496 13,649
Payables and prepayments 63,196 73,488 55,846
Income tax liability 1,429 816 1,202
Short-term provisions 5,366 6,866 6,347
  83,617 102,666 77,044
Non-current liabilities      
Long-term borrowings 18,767 45,355 15,409
Deferred income tax liability 3,032 1,655 3,001
Other long-term payables 3,570 3,164 4,026
  25,369 50,174 22,436
       
TOTAL LIABILITIES 108,986 152,840 99,480
       
EQUITY      
Non-controlling interests 4,159 4,135 4,207
Equity attributable to equity holders of the parent      
Share capital 7,929 7,929 7,929
Statutory reserve capital 793 793 793
Currency translation differences (790) (906) (814)
Retained earnings 148,688 124,345 145,320
  156,620 132,161 153,228
TOTAL EQUITY 160,779 136,296 157,435
       
TOTAL LIABILITIES AND EQUITY 269,765 289,136 256,915

Interim report is attached to the announcement and is also published on NASDAQ Tallinn and Merko’s web page (group.merko.ee).

Priit Roosimägi
Head of Group Finance Unit
AS Merko Ehitus
+372 650 1250
priit.roosimagi@merko.ee

AS Merko Ehitus (group.merko.ee) group consists of AS Merko Ehitus Eesti in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør 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 2020, the group employed 666 people, and the group’s revenue for 2020 was EUR 316 million.

Attachment



Merko_Ehitus_2021_3M_interim_report.pdf