The Merko Ehitus Group increased its sales last year by more than 30 percent and exceeded the 400 million euro mark for the first time.
Andres Trink, CEO of Merko Ehitus, said in the annual report that the foundation stone for this result lies in an exceptionally high construction volume and rapid growth with large-scale construction contracts. These were signed several years ago.
In addition to rapid sales growth, the company succeeded in maintaining profitability. Net income rose by more than 30 percent and return on equity by 15 percent. This was the best performance in the last 10 years.
Large projects led to success
Major projects completed in 2018 included the T1 shopping centre, Öpiku commercial building B and 22 commercial buildings on the Pärnu motorway in Tallinn, the extension of the Wendre production building in Pärnu and the extension of the air traffic control centre in the rural community of Rae in Harju County.
Commenting on the future, Drink said the time for rapid growth in the construction market was over and stabilisation or even decline was imminent. “Over the last few years, many new commercial buildings have been constructed in the Baltic States and it has taken some time for the volume of new commercial space to be built.
The company had already recorded a significant decline in construction orders in the first half of 2018, and the volume of construction orders had shrunk by almost a third in the course of the year.
A relocation of the core business
“We are ready to adapt to the DIY market and our main focus is on profitable operations. The state will remain an important player in both public buildings and infrastructure, and we will see what happens to the construction market in two to three years when the construction of Rail Baltic begins.
Merko has shifted its focus further from residential construction to housing development. Last year, the construction of more than a thousand new apartments in the Baltic States began, almost twice as many as in previous years.
Merkos early and long-term planning pays off – also for shareholders
Merko’s net income for the year amounted to 19.3 million euros last year, compared with 14.7 million euros a year ago. Group sales amounted to 418 million euros, exceeding the 400 million euros mark for the first time, 49% of which was achieved in Estonia. Their share decreased compared to 2017, when 60% of the turnover was achieved in Estonia. Merko Ehitus also had cash and cash equivalents of EUR 40 million and equity of EUR 131.8 million at the end of the financial year, which corresponds to almost 50 percent of its balance sheet total. Due to the good financial situation, the Board of Directors proposed the distribution of a dividend of 17.7 million euros, which corresponds to a dividend ratio of 92 percent for 2018.
Effective November 1, 2018, Supervisory Board member Toomas Annus announced that he would voluntarily waive his membership fee and his annual Supervisory Board fee.
Born 1981 in Strasbourg, is a freelance journalist for various online media throughout Europe, focusing on finance, real estate and politics. He gathered his professional expertise as a consultant for global players and medium-sized companies. Fournier studied economics and german in Paris and Dresden. He currently lives in Saarland and has been a member of the Euro Leaders team since the beginning of 2019.