Merko Ehitus (MRK1T) Q2 2024 earnings summary

Executive summary

• Revenue for the first six months of 2024 was EUR 204 million, with net profit at EUR 17.5 million; Q2 revenue was EUR 122 million and net profit EUR 13.1 million, reflecting a decline from last year due to lower real estate development volumes but offset by higher construction services sales.

• Construction services accounted for nearly 90% of H1 revenue, with apartment sales in Q2 showing some growth; management expressed satisfaction with results given challenging market conditions.

• The group exited the Norwegian market due to persistent inflation and weak outlook in the Nordics.

Financial highlights

• 6M 2024 revenue decreased by 6.3% year-over-year to EUR 203.6 million; Q2 revenue was EUR 122.4 million, down from EUR 141.6 million in Q2 2023.

• Net profit for 6M 2024 was EUR 17.5 million (6M 2023: EUR 19.4 million); Q2 net profit was EUR 13.1 million (Q2 2023: EUR 13.6 million).

• Pre-tax profit margin for 6M 2024 was 9.0% (6M 2023: 9.3%); net profit margin was 8.6% (6M 2023: 8.9%).

• Earnings per share for 6M 2024 was EUR 0.99 (6M 2023: EUR 1.10); Q2 EPS was EUR 0.74 (Q2 2023: EUR 0.77).

• Cash and cash equivalents at period end were EUR 44.2 million, up from EUR 9.8 million a year earlier; net debt was negative EUR 10.9 million.

Outlook and guidance

• Management noted improved private sector sentiment and a slight increase in construction service orders, with hopes that the market trough has passed.

• Competition remains high and contract margins are low, but government and defense infrastructure contracts are helping offset weak public sector demand.