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Published: 2022-02-10 07:00:00 CET
Merko Ehitus
Quarterly report

2021 12 months and IV quarter consolidated unaudited interim report


Fourth-quarter revenue for Merko Ehitus was EUR 112.8 million and net profit for the same period was EUR 13.9 million. The revenue for the 12 months of 2021 grew by 7% compared to the previous year to EUR 339.4 million and net profit by 27% to over EUR 29 million. This year in the three Baltic states Merko has launched construction of more than 1,450 apartments due to be completed in the next two years.

According to the management of Merko Ehitus, the results for 2021 exceeded expectations from a year ago, especially considering the rapid growth of construction prices and continuing major supply chain problems. The market situation for general construction contracting has not improved. Furthermore, uncertainty is also fed by rising inflation, which in the absence of countermeasures threatens to engulf all prices in an upward spiral. Longer-term fixed-price contracts involve high risks that cannot be borne by general contractors alone, and more flexible pricing could be a solution. We will certainly see difficulties in the construction market in fulfilling the past contracts on time, and probably also the increase in the price of new construction objects. New developments and actual orders will be coming on the market, above all in the warehousing and logistics sector (which is continuing on a growth trajectory), the wind energy segment and public sector projects that cannot stand to be postponed. In the next period, Merko will keep concentrating more on the apartment development field, where we trust in our ability to keep the speed and cost of the development and construction process largely under control.

The proportion of apartment development in the group’s Q4 revenue was traditionally high, due to the timing of the project completion and delivery of sold apartments to buyers. Overall for the 12 months, real estate development made up less than 1/3 of revenue but over 2/3 of net profit. New sales of apartments in the Merko Ehitus group reflect the general situation on the apartment market – only a few of the completed apartments are unsold and over half of the ones under construction are covered by preliminary sale contracts.

In 2021, Merko handed over 496 apartments and 7 commercial spaces to buyers and will continue construction of more than 1,800 apartments, which will be completed in 2022 and 2023. The largest residential developments are Noblessner, Uus-Veerenni, Odra, Metsatuka and Lahekalda in Tallinn; Erminurme in Tartu; Viesturdārzs and Mežpilsēta in Riga and Vilneles Skverai in Vilnius.
Given the challenges of recent years in terms of pandemic and supply chain areas, the companies in Merko group have fared well, with timely responses to changes in the real estate market and higher demand for modern apartments. In pandemic conditions, they have managed to organize work on project sites without major stoppages. This has allowed return on equity to be raised to a level last seen prior to the financial crisis. The employees of Merko companies and all partners should be thanked, as they have found solutions to the unstable conditions on markets for key construction inputs and have harnessed possibilities for achieving goals as opportunities arise. However, new challenges are already ahead in the form of soaring energy prices and the onset of the green transition, which will certainly pose new obstacles and restrictions to usual activities in construction and real estate development.

In 2021, Merko signed EUR 288 million worth new construction contracts and the secured order-book balance reached EUR 257 million.

In the fourth quarter, the largest sites in progress were the third phase of the third development phase of the Mustamäe medical campus of the North-Estonia Medical Centre, the Tallinn School of Music and Ballet, St John’s School, the Liivalaia quarter’s zero-cycle construction works and the construction of infrastructure segments of the Republic of Estonia’s southeast land border. In Latvia, the Orkla wafer and biscuit production plant, GUSTAVS business centre, Elemental Skanste office buildings, NATO facilities in Ādaži and the Kauguri city park and youth house were in progress; and in Lithuania, infrastructure for a number of wind farms and the Kaunas district police headquarters building, NATO barracks and a production building for Continental Automotive.


2021 12 months’ pre-tax profit was EUR 32.1 million and Q4 2021 was EUR 15.6 million (12M 2020: EUR 24.5 million and Q4 2020 was EUR 10.6 million), which brought the pre-tax profit margin to 9.5% (12M 2020: 7.7%).
Net profit attributable to shareholders for 12 months 2021 was EUR 29.1 million (12M 2020: EUR 23.0 million) and for Q4 2021 net profit attributable to shareholders was EUR 13.9 million (Q4 2020: EUR 9.9 million). 12 months net profit margin was 8.6% (12M 2020: 7.3%).

Q4 2021 revenue was EUR 112.8 million (Q4 2020: EUR 106.4 million) and 12 months’ revenue was EUR 339.4 million (12M 2020: EUR 315.9 million). 12 months’ revenue increased by 7.4% compared to same period last year. The share of revenue earned outside Estonia in 12 months 2021 was 37.4% (12M 2020: 43.9%).

As of 31 December 2021, the group’s secured order book was EUR 257.3 million (31 December 2020: EUR 225.1 million). In 12 months 2021, group companies signed new contracts in the amount of EUR 288.1 million (12M 2020: EUR 277.2 million). In Q4 2021, new contracts were signed in the amount of EUR 15.2 million (Q4 2020: EUR 29.1 million).

In 12 months 2021, the group sold a total of 496 apartments; in 12 months 2020, the group sold 895 apartments. The group earned a revenue of EUR 72.7 million from sale of own developed apartments in 12 months 2021 and EUR 116.6 million in 12 months 2020. In Q4 of 2021 a total of 299 apartments were sold, compared to 361 apartments in Q4 2020, and earned a revenue of EUR 39.4 million from sale of own developed apartments (Q4 2020: EUR 49.6 million).

At the end of the reporting period, the group had EUR 44.9 million in cash and cash equivalents, and equity of EUR 167.2 million (51.6% of total assets). Comparable figures as of 31 December 2020 were EUR 47.5 million and EUR 153.2 million (59.6% of total assets), respectively. As of 31 December 2021, the group’s net debt was EUR 7.7 million (31 December 2020: negative EUR -18.4 million).
In coordination with the Supervisory Board, the Management Board proposes to distribute to shareholders EUR 17.7 million in dividends (1 euro per share) from retained earnings in 2022. This is equivalent to a 61% dividend rate for 2021.

in thousand euros

12 months
12 months
 IV quarter
 IV  quarter
Revenue 339,375 315,918 112,842 106,438
Cost of goods sold (292,563) (272,169) (92,499) (87,901)
Gross profit 46,812 43,749 20,343 18,537
Marketing expenses (3,611) (4,212) (979) (1,055)
General and administrative expenses (13,925) (13,412) (4,827) (5,264)
Other operating income 3,508 2,320 997 606
Other operating expenses (582) (2,979) (254) (1,663)
Operating profit 32,202 25,466 15,280 11,161
Finance income/costs (75) (1,009) 276 (577)
incl. finance income/costs from associates and joint venture 799 (144) 415 (348)
interest expense (681) (719) (133) (189)
foreign exchange gain (loss) (8) (7) 31 5
other financial income (expenses) (185) (139) (37) (45)
Profit before tax 32,127 24,457 15,556 10,584
Corporate income tax expense (3,104) (1,954) (1,678) (727)
Net profit for financial year 29,023 22,503 13,878 9,857
incl. net profit attributable to equity holders of the parent 29,140 22,994 13,863 9,923
net profit attributable to non-controlling interest (117) (491) 15 (66)
Other comprehensive income, which can subsequently be classified in the income statement        
Currency translation differences of foreign entities 33 (115) 19 2
Comprehensive income for the period 29,056 22,388 13,897 9,859
incl. net profit attributable to equity holders of the parent 29,163 22,890 13,871 9,951
net profit attributable to non-controlling interest (107) (502) 26 (92)
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 1.65 1.30 0.78 0.56

in thousand euros

  31.12.2021 31.12.2020
Current assets    
Cash and cash equivalents 44,930 47,480
Trade and other receivables 55,484 32,657
Prepaid corporate income tax 114 306
Inventories 160,593 126,332
  261,121 206,775
Non-current assets    
Investments in associates and joint ventures 7,703 2,354
Other long-term loans and receivables 24,079 17,979
Deferred income tax assets 622 653
Investment property 13,828 13,922
Property, plant and equipment 16,350 14,521
Intangible assets 669 711
  63,251 50,140
TOTAL ASSETS 324,372 256,915
Current liabilities    
Borrowings 11,636 13,649
Payables and prepayments 90,054 55,846
Income tax liability 681 1,202
Short-term provisions 7,976 6,347
  110,347 77,044
Non-current liabilities    
Long-term borrowings 41,001 15,409
Deferred income tax liability 3,112 3,001
Other long-term payables 2,900 4,026
  47,013 22,436
TOTAL LIABILITIES 157,360 99,480
Non-controlling interests (227) 4,207
Equity attributable to equity holders of the parent    
Share capital 7,929 7,929
Statutory reserve capital 793 793
Currency translation differences (791) (814)
Retained earnings 159,308 145,320
  167,239 153,228
TOTAL EQUITY 167,012 157,435

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 Group Finance
AS Merko Ehitus
+372 650 1250

AS Merko Ehitus (group.merko.ee) group consists of AS Merko Ehitus Eesti and Tallinna Teede AS in Estonia, SIA Merks in Latvia, UAB Merko Statyba in Lithuania and Peritus Entreprenør AS in Norway. Besides providing construction service as a general contractor, the group’s other major area of activity is apartment development. As at the end of 2021, the group employed 672 people, and the group’s revenue for 2021 was EUR 339 million.