Net profit of Merko Ehitus EUR 1.8 million in first quarter
The sales revenue of AS Merko Ehitus in the first quarter of 2013 amounted to EUR 47.9 million, which is on the same level with last year. The majority of the company’s revenue is still generated in Estonia, but revenue in Latvia has doubled compared to the first quarter of 2012. Net profit in the first quarter amounted to EUR 1.8 million, compared to EUR 0.2 million in the same period in the previous year.
“The first quarter sales revenue of the Merko companies met expectations and considering the long winter period, profitability was somewhat higher than we expected. Among other things, the successful sales of apartments in the capitals of all three Baltic States contributed to profitability. We are pleased that in the first quarter we concluded new construction contracts in the amount of EUR 45 million, and that the majority thereof is made up by private clients, which helps balance the decrease of public procurements in our portfolio. Outside the first quarter, we have also signed several major construction contracts also in April,” said Andres Trink, Chairman of the Management Board of AS Merko Ehitus.
“At the same time, we are seeing the bids for new contracts becoming increasingly aggressive, and that puts pressure on the profitability of the construction business in the future. Despite the continued recovery of the residential market, the further growth of profitability in the area of apartment development is limited by the level of construction and property prices. We still estimate that the volume of new public procurements may drop in the second half of the year, which in turn may affect the volume of works in 2014,” Trink added.
The company’s main projects in the first quarter of 2013 included construction works at the North Estonia Medical Centre and the production facilities of Tallegg, the reconstruction of pipelines at Vääna-Jõesuu, the construction of Eesti Energia’s 300MW power plant and the continued construction of the Ülemiste traffic junction that is scheduled to be completed by the end of 2013. In the first quarter, the company sold 57 apartments with the total value of EUR 6.2 million (excl. VAT); as at the end of the period the group owned 98 unsold completed apartments (41 in Estonia, 22 in Latvia and 35 in Lithuania). As an important project, Merko continues the construction of a residential and commercial building with 111 apartments at Kentmanni 6 in central Tallinn, work on which was started in 2008.