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Long-term financial objectives

At the meeting held on 8 April 2013, the Management Board and the Supervisory Board of AS Merko Ehitus reviewed the company’s strategic development directions and approved long-term financial objectives until 2018.

Considering the weak growth perspective of the Baltic construction and real estate market in the coming few years, the overall low interest environment and the company’s high equity base, the strategy and the financial objectives are focussed on improving the return on invested capital and increasing the efficiency of the balance structure.

The long-term financial objectives of AS Merko Ehitus relate to the period until 2018 and are reviewed annually based on the market situation, the financial condition and strategy of the company:

  • average return on equity of the period of at least 10%
  • dividend rate: 50-70% of annual profit
  • equity ratio: at least 40%

In 2017, the group fulfilled all set financial objectives. In 2017, the group’s return on equity was 11.9% (2016: 5.0%). and the equity ratio 47.0% (2016: 51.6%). In general, the profitability of the main contractors in the construction sector has been under strong pressure for several years. This trend is continuing and increasing. In 2017, the group’s productivity was improved by nonrecurring real estate transactions, the preparation for which spanned a longer period. Considering the high equity level of the group and modest debt level, the estimated dividend rate for 2017 is 120% (2016: 119%).