Merko Ehitus (MRK1T) Q3 2024 earnings summary

Executive summary

• Revenue for 9M 2024 reached €379 million, up 11.4% year-over-year, with net profit at €44.8 million, exceeding expectations due to accelerated project completions and conservative cost management.

• Construction services accounted for 90% of revenue, with the Arter Quarter project nearing 80% completion and several large contracts secured.

• Real estate development results were lower than last year but outperformed initial expectations, with 194 apartments and 11 commercial units delivered.

• The secured order book remained robust at €431 million at the end of September, despite a 3.9% annual decrease.

Financial highlights

• 9M 2024 revenue: €378.7 million (9M 2023: €339.8 million); Q3 2024 revenue: €175.1 million (Q3 2023: €122.5 million).

• Net profit for 9M 2024: €44.8 million (9M 2023: €32.1 million); Q3 2024 net profit: €27.3 million (Q3 2023: €12.7 million).

• Pre-tax profit margin for 9M 2024: 13.1% (9M 2023: 10.0%); net profit margin: 11.8% (9M 2023: 9.5%).

• Cash and cash equivalents at period end: €61.1 million; equity: €234.6 million (51.3% of total assets).

• Negative net debt of €22.2 million as of 30 September 2024.

Outlook and guidance

• Management remains moderately optimistic, expecting stable construction prices with minor fluctuations and no major changes in market activity.

• Construction volumes may face pressure due to budget constraints and uncertainty over EU support, especially for Rail Baltica.

• Defence investments are expected to remain strong, but cannot fully offset declines in other segments.

• Real estate market activity is below long-term averages, with stable prices and limited new supply expected.