Merko Ehitus (MRK1T) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue reached EUR 85.2 million, up 5% year-over-year, with net profit at EUR 10.5 million, more than doubling from EUR 4.4 million in Q1 2024.

• Real estate development contributed 30% of Q1 revenue, nearly doubling its share from the prior year, driven by strong activity in Lithuania and increased apartment deliveries.

• Construction services revenue declined 13.1% year-over-year, but operating profit margin improved to 6.3% due to cost savings and project execution.

• Secured order book at quarter-end was EUR 331.9 million, down 20.8% year-over-year, with EUR 50.6 million in new contracts signed in Q1 2025.

• Dividend of EUR 1.90 per share (EUR 33.6 million total) approved for 2024, representing a 52% payout ratio and 9.1% yield.

Financial highlights

• Gross profit margin rose to 17.5% (Q1 2024: 10.9%), and net profit margin increased to 12.3% (Q1 2024: 5.5%).

• EBITDA for Q1 2025 was EUR 10.6 million (Q1 2024: EUR 4.9 million), with an EBITDA margin of 12.5%.

• Return on equity reached 29.5% and return on assets 16.1% as of 31 March 2025.

• Cash and cash equivalents stood at EUR 78.5 million, with a negative net debt of EUR 53.4 million.

• Equity ratio improved to 61.0% (Q1 2024: 50.8%), and debt ratio decreased to 5.8%.

Outlook and guidance

• Construction price index continues to rise, mainly due to labor costs, with Lithuania showing the strongest market and price growth.

• Public sector orders, especially in defense and renewable energy, are expected to dominate in 2025, while private sector demand remains cautious.

• Modest growth is forecast for the Baltic construction market in H1 2025, but broad-based growth is unlikely due to weak road and commercial real estate segments.

• New housing prices are expected to rise in line with inflation, with market activity supported by improved confidence in Vilnius and Tallinn.