Merko Ehitus Reports Impressive Growth Amid Economic Challenges
Overview of Merko Ehitus’ Financial Performance
In a remarkable year, Merko Ehitus has demonstrated outstanding resilience and growth in its 2024 financial results. The company posted a revenue of EUR 539 million and a net profit of EUR 64.7 million for the year, demonstrating a positive trajectory for this established construction and real estate development firm. The fourth quarter alone saw revenue reach EUR 160.4 million with a net profit of EUR 19.9 million.
Solid Strategies Driving Success
The management team attributes the robust results to strategic focus on select sectors and projects, resulting in effective risk management and expense control. Major projects completed in 2024 include the Arter Quarter and a tram line extending to the Old City Harbour, showcasing Merko’s commitment to impactful infrastructure development.
Adapting to the Changing Market
Merko has adapted well to market fluctuations, emphasizing their achievement in wind farm infrastructure projects, where they built 87 turbine foundations using an efficient, industrial production process. This has allowed for significant cost savings and timely project deliveries, further reinforcing their financial stability.
A Decrease in New Contracts
Despite the overall profitability, the company saw a reduction in new contracts as 2024 came to a close, signing one-third fewer contracts compared to the previous year. This reduction reflects broader economic trends, particularly in the Estonian and Latvian construction sectors, which are faced with challenges such as low investment activity and competitive pricing pressures. Nevertheless, the companies within the Merko Group secured new contracts totaling EUR 338 million in 2024.
Performance in Real Estate Development
As for the real estate development division, 2024 presented more modest results, with only 40% of the revenue recognized in 2023 being achieved this year. However, Merko has remained profitable within this segment despite the softer market conditions affecting the sale of apartments. Even with the challenging economic landscape, the default rate on obligations remained stable.
Apartment Deliveries and Future Projects
During 2024, Merko successfully delivered 323 apartments along with 11 commercial units. They launched the construction and sales of an additional 259 new apartments, demonstrating a commitment to meeting market demands. Notably, major ongoing developments include significant projects across Estonia, Latvia, and Lithuania.
Financial Strength and Proposals
The company’s financial position remains solid, with a negative net debt of EUR 58.5 million as of December 31, 2024, reflecting effective financial management in a higher interest rate environment. The management proposes distributing EUR 33.6 million in dividends, translating to EUR 1.90 per share, indicating confidence in the company’s continued profitability and stakeholder returns.
Looking Ahead for 2025
Looking towards the future, Merko Ehitus is optimistic about developments in Lithuania where the construction market remains vibrant, contrasting with more challenging conditions anticipated in Estonia and Latvia. The company’s focus on strategic growth, efficiency, and innovation will be pivotal in navigating upcoming market cycles.
Frequently Asked Questions
What were the key financial results for Merko Ehitus in 2024?
Merko Ehitus reported a revenue of EUR 539 million and a net profit of EUR 64.7 million for the year, with Q4 results showing EUR 160.4 million in revenue and EUR 19.9 million in profit.
What factors contributed to Merko’s success in 2024?
The management credited their focus on strategic projects, efficient risk management, and expense control as crucial factors driving their success in 2024.
How did the number of new contracts change in 2024?
Merko entered into approximately one-third fewer new contracts than in 2023 due to a combination of low investments and competitive challenges in the market.
What proposals were made regarding shareholder dividends?
The management board proposed to distribute EUR 33.6 million in dividends to shareholders, amounting to EUR 1.90 per share, reflecting their commitment to returning value to investors.
What are Merko’s expectations for the future market?
The company is cautiously optimistic about the Lithuanian market while anticipating more complex conditions for the Estonian and Latvian sectors due to economic challenges.
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