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Published: 2023-02-09 07:00:00 CET
Merko Ehitus
Quarterly report

2022 12 months and IV quarter consolidated unaudited interim report


Merko Ehitus revenue was EUR 143 million in Q4 2022, and the revenue for 12 months amounted to EUR 410 million, while the respective figures for net profit were EUR 17.6 million and 12 months was EUR 34.6 million. Merko has delivered more than 900 apartments to buyers in 12 months this year.

According to the management of Merko Ehitus, the group’s results for 2022 reflect the increase of investments in previous years into apartment development business area, the choice of the right development projects and successful sale of apartments on all three Baltic markets. The greatest share of Merko’s profit came from the real estate development business area.

The outlook for the residential real estate market worsened last year rapidly in connection with soaring inflation and interest rates, as well as due to the uncertainty from the Ukraine war. The volume of preliminary sales of new apartments dropped to all-time lows in November, which made the group to slow down the tempo of launching new developments. Although the sales volume will also decrease in the years ahead along with the construction volume, our long-term position and development potential on the residential real estate market of the Baltic capitals remain solid.

In the 12 months of 2022, the group companies signed new construction contracts worth EUR 318 million and the balance of secured order book stood at EUR 297 million as of the end of December (respectively EUR 288 million and EUR 257 million in 2021). There was much ambiguity in the construction service field last year in connection with the rapid growth of energy prices and other construction input prices. Both customers and construction enterprises spent much time and energy to find the best balance in sharing price and supply risks. Few new business real estate projects came on to the market, a number of public procurements were postponed to future periods and road construction investment volumes were downsized significantly. According to the management, in this sort of complicated market situation, the volume of construction contracts concluded last year and the portfolio of orders can be considered a fairly good footing for supporting the construction service business area for the next 12-24 months. Since a certain stabilization has been seen in construction process and an adaptation to inflation is also under way, hopefully new construction sites will come to the market in future. The management hopes that the group companies’ capabilities will support continued investment into the energy sector. According to management, the group must continue to adapt quickly to market changes, being in the project management business and directly dependent on orders.
In the 12 months of this year, the group delivered 923 new apartments and nine commercial units to buyers (12 months of 2021: 496 apartments and 7 commercial units). According to the management, there is still hope that in the next 12 months, confidence will recover and demand for new housing will improve, supported by growing need for homes with higher energy-efficient.

During the 12 months, the group launched five new development projects with a total 581 apartments. As of year’s end, there were 1,207 apartments under construction by the group, of which almost half were covered by preliminary sale contracts. The largest apartment developments were Uus-Veerenni, Noblessneri and Lahekalda in Tallinn; Erminurme in Tartu; Viesturdārzs, Mežpilsēta and Magnolijas in Riga, and Vilneles Skverai in Vilnius.

In Q4 of 2022, the largest objects under construction in Estonia were the third phase of the Mustamäe medical campus of the North-Estonia Medical Centre, Pelgulinna and Rae state gymnasiums, the Arter Quarter, construction of infrastructure segments of the Republic of Estonia’s southeast land border, the tram line between Old City Harbour and Rail Baltic’s Ülemiste passenger terminal, and renovation of Rannamõisa tee and Vana-Kalamaja street in Tallinn. In Latvia, projects in progress included the GUSTAVS business centre, Elemental Skanste office buildings and NATO facilities in Adaži; in Lithuania, several wind farm infrastructures as well as a car service building and NATO training centre buildings in Vilnius.


2022 12 months’ pre-tax profit was EUR 37.1 million and Q4 2022 was EUR 18.4 million (12M 2021: EUR 32.1 million and Q4 2021 was EUR 15.6 million), which brought the pre-tax profit margin to 9.1% (12M 2021: 9.5%).
Net profit attributable to shareholders for 12 months 2022 was EUR 34.6 million (12M 2021: EUR 29.1 million) and for Q4 2022 net profit attributable to shareholders was EUR 17.6 million (Q4 2021: EUR 13.9 million). 12 months net profit margin was 8.5% (12M 2021: 8.6%).

Q4 2022 revenue was EUR 143.4 million (Q4 2021: EUR 112.8 million) and 12 months’ revenue was EUR 409.6 million (12M 2021: EUR 339.4 million). 12 months’ revenue increased by 20.7% compared to same period last year. The share of revenue earned outside Estonia in 12 months 2022 was 50.1% (12M 2021: 37.4%).

As of 31 December 2022, the group’s secured order book was EUR 297.2 million (31 December 2021: EUR 257.3 million). In 12 months 2022, group companies signed contracts in the amount of EUR 317.9 million (12M 2021: EUR 288.1 million). In Q4 2022, new contracts were signed in the amount of EUR 27.5 million (Q4 2021: EUR 15.2 million).

In 12 months 2022, the group sold a total of 923 apartments (incl. 46 apartments in a joint venture); in 12 months 2021, the group sold 496 apartments (incl. 1 apartment in a joint venture). The group earned a revenue of EUR 127.0 million from sale of own developed apartments in 12 months 2022 and EUR 72.7 million in 12 months 2021. In Q4 of 2022 a total of 467 apartments were sold, compared to 299 apartments in Q4 2021, and earned a revenue of EUR 70.2 million from sale of own developed apartments (Q4 2021: EUR 39.4 million).

At the end of the reporting period, the group had EUR 17.7 million in cash and cash equivalents, and equity of EUR 184.2 million (47.5% of total assets). Comparable figures as of 31 December 2021 were EUR 44.9 million and EUR 167.2 million (51.6% of total assets), respectively. As of 31 December 2022, the group’s net debt was EUR 74.3 million (31 December 2021: EUR 7.7 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 2023. This is equivalent to a 51% dividend rate for 2022.

in thousand euros

12 months
12 months
 IV quarter
 IV quarter
Revenue 409,633 339,375 143,427 112,842
Cost of goods sold (355,975) (292,563) (120,852) (92,499)
Gross profit 53,658 46,812 22,575 20,343
Marketing expenses (4,077) (3,611) (1,132) (979)
General and administrative expenses (15,860) (13,925) (4,449) (4,827)
Other operating income 3,144 3,508 718 997
Other operating expenses (1,834) (582) (1,187) (254)
Operating profit 35,031 32,202 16,525 15,280
Finance income/costs 2,067 (75) 1,899 276
incl. finance income/costs from associates and joint ventures 3,516 799 2,423 415
interest expense (1,180) (681) (510) (133)
foreign exchange gain (loss) (138) (8) 14 31
other financial income (expenses) (131) (185) (28) (37)
Profit before tax 37,098 32,127 18,424 15,556
Corporate income tax expense (2,995) (3,104) (1,084) (1,678)
Net profit for financial year 34,103 29,023 17,340 13,878
incl. net profit attributable to equity holders of the parent 34,640 29,140 17,617 13,863
net profit attributable to non-controlling interest (537) (117) (277) 15
Other comprehensive income, which can subsequently be classified in the income statement        
Currency translation differences of foreign entities 30 33 19 19
Comprehensive income for the period 34,133 29,056 17,359 13,897
incl. net profit attributable to equity holders of the parent 34,648 29,163 17,628 13,871
net profit attributable to non-controlling interest (515) (107) (269) 26
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) 1.96 1.65 1.00 0.78

in thousand euros

  31.12.2022 31.12.2021
Current assets    
Cash and cash equivalents 17,665 44,930
Trade and other receivables 77,959 55,484
Prepaid corporate income tax 38 114
Inventories 225,661 160,593
  321,323 261,121
Non-current assets    
Investments in associates and joint ventures 12,895 7,703
Other long-term loans and receivables 22,982 24,079
Deferred income tax assets 693 622
Investment property 11,485 13,828
Property, plant and equipment 17,452 16,350
Intangible assets 582 669
  66,089 63,251
TOTAL ASSETS 387,412 324,372
Current liabilities    
Borrowings 49,687 11,636
Payables and prepayments 96,248 90,054
Income tax liability 1,241 681
Short-term provisions 9,820 7,976
  156,996 110,347
Non-current liabilities    
Long-term borrowings 42,236 41,001
Deferred income tax liability 2,355 3,112
Other long-term payables 2,133 2,900
  46,724 47,013
TOTAL LIABILITIES 203,720 157,360
Non-controlling interests (495) (227)
Equity attributable to equity holders of the parent    
Share capital 7,929 7,929
Statutory reserve capital 793 793
Currency translation differences (783) (791)
Retained earnings 176,248 159,308
  184,187 167,239
TOTAL EQUITY 183,692 167,012

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 develop real estate and construct buildings and infrastructure. We create a better living environment and build the future. We operate in Estonia, Latvia, Lithuania and Norway. As at the end of 2022, the group employed 661 people, and the group’s revenue for 2022 was EUR 410 million.