COMMENTARY FROM MANAGEMENT
Merko Ehitus posted revenue of
The decrease in revenue by about a quarter compared to the same period last year was to be expected – there were fewer major projects in progress and the construction market was seeing a cooling trend. Starting from March, business activity began to be affected by pandemic related restrictions, but the impact of the pandemic on the group’s operations and results will start to show up more extensively in the quarters ahead.
The outlook for the construction and real estate sector in all of group’s home markets became negative in March, and the possibility that the impact of the economic crisis will be long in duration. Due to that, the group cancelled its initial dividend proposal and suspended the launch of new apartment developments at first for three months until there is greater clarity on further developments. Therefore, the supply of group’s apartments will decrease from the planned level for both 2020 and 2021. The group’s companies have started gradually implementing cost control measures to ensure efficient functioning and strong capability for operating both during and after the crisis.
Most of the commercial real estate projects have been placed on hold. Private sector clients have practically disappeared from the construction market and public sector procurements will play a commanding role in new construction tenders. It will definitely take time for private sector clients’ confidence to recover and adjust to the new conditions. Management hopes that state investments into buildings and infrastructure will continue and project preparations will speed up to support the vitality of the construction sector and prevent job losses. Due to the projected drop in construction volumes, price competition in construction tenders has become even more aggressive. A positive aspect is that work is continuing on the group’s construction sites and new construction contracts worth
In Q1 of 2020, Merko Ehitus handed over 133 apartments to home buyers (Q1 2019: 63 apartments) and 3 commercial premises. Merko’s biggest projects in
In connection with the pandemic, the sales of new apartments slowed down starting in March in
People and companies must quickly learn to operate in conditions of higher health risks and restrictions on everyday activities. Group’s companies are taking the necessary safety measures in the apartment sale process and use digital channels to execute transactions. In current situation, home buyers put even more importance on a trustworthy developer and integrally developed living environments. The group will complete the developments in progress and assess possibilities of launching new projects based on the market situation. The management also analyses how the current crisis could impact the real estate market in the future.
Merko Ehitus posted revenue of
The largest projects in progress for Merko in Q1 in
OVERVIEW OF THE 3 MONTHS RESULTS
PROFITABILITY
2020 3 months’ profit before tax was
Net profit attributable to equity holders of the parent in 3 months 2020 was
REVENUE
2020 3 months’ revenue was
SECURED ORDER BOOK
As at
REAL ESTATE DEVELOPMENT
In 3 months 2020, the group sold a total of 133 apartments (incl. 2 apartments in a joint venture); in 3 months 2019, the group sold 63 apartments (incl. 29 apartments in a joint venture). The group earned a revenue of
CASH POSITION
At the end of the reporting period, the group had
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
unaudited
in thousand euros
2020 3 months | 2019 3 months | 2019 12 months | |
Revenue | 55,872 | 76,845 | 326,779 |
Cost of goods sold | (50,398) | (70,639) | (291,958) |
Gross profit | 5,474 | 6,206 | 34,821 |
Marketing expenses | (948) | (851) | (4,260) |
General and administrative expenses | (2,805) | (3,124) | (12,988) |
Other operating income | 508 | 701 | 2,983 |
Other operating expenses | (63) | (35) | (1,318) |
Operating profit | 2,166 | 2,897 | 19,238 |
Finance income/costs | (99) | 83 | 1,085 |
incl. finance income/costs from joint venture | 90 | 222 | 1,766 |
interest expense | (172) | (135) | (656) |
other financial income (expenses) | (17) | (4) | (25) |
Profit before tax | 2,067 | 2,980 | 20,323 |
Corporate income tax expense | (138) | (75) | (3,833) |
Net profit for financial year | 1,929 | 2,905 | 16,490 |
incl. net profit attributable to equity holders of the parent | 2,019 | 2,778 | 16,270 |
net profit attributable to non-controlling interest | (90) | 127 | 220 |
Other comprehensive income, which can subsequently be classified in the income statement | |||
Currency translation differences of foreign entities | (188) | 32 | 13 |
Comprehensive income for the period | 1,741 | 2,937 | 16,503 |
incl. net profit attributable to equity holders of the parent | 1,823 | 2,808 | 16,281 |
net profit attributable to non-controlling interest | (82) | 129 | 222 |
Earnings per share for profit attributable to equity holders of the parent (basic and diluted, in EUR) | 0.11 | 0.16 | 0.92 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
unaudited
in thousand euros
ASSETS | |||
Current assets | |||
Cash and cash equivalents | 37,056 | 32,970 | 24,749 |
Trade and other receivables | 42,133 | 75,297 | 50,413 |
Prepaid corporate income tax | 91 | 224 | 104 |
Inventories | 168,833 | 130,019 | 166,226 |
248,113 | 238,510 | 241,492 | |
Non-current assets | |||
Investments in joint venture | 2,588 | 954 | 2,498 |
Other long-term loans and receivables | 11,991 | 11,043 | 11,094 |
Investment property | 14,021 | 14,140 | 14,047 |
Property, plant and equipment | 11,699 | 10,853 | 11,919 |
Intangible assets | 724 | 700 | 777 |
41,023 | 37,690 | 40,335 | |
TOTAL ASSETS | 289,136 | 276,200 | 281,827 |
LIABILITIES | |||
Current liabilities | |||
Borrowings | 21,496 | 15,624 | 20,725 |
Payables and prepayments | 73,488 | 82,764 | 69,585 |
Income tax liability | 816 | 420 | 812 |
Short-term provisions | 6,866 | 7,081 | 7,976 |
102,666 | 105,889 | 99,098 | |
Non-current liabilities | |||
Long-term borrowings | 45,355 | 27,220 | 43,001 |
Deferred income tax liability | 1,655 | 1,521 | 1,682 |
Other long-term payables | 3,164 | 2,299 | 3,491 |
50,174 | 31,040 | 48,174 | |
TOTAL LIABILITIES | 152,840 | 136,929 | 147,272 |
EQUITY | |||
Non-controlling interests | 4,135 | 4,706 | 4,217 |
Equity attributable to equity holders of the parent | |||
Share capital | 7,929 | 7,929 | 7,929 |
Statutory reserve capital | 793 | 793 | 793 |
Currency translation differences | (906) | (691) | (710) |
Retained earnings | 124,345 | 126,534 | 122,326 |
132,161 | 134,565 | 130,338 | |
TOTAL EQUITY | 136,296 | 139,271 | 134,555 |
TOTAL LIABILITIES AND EQUITY | 289,136 | 276,200 | 281,827 |
Interim report is attached to the announcement and are also published on NASDAQ Tallinn and Merko’s web page (group.merko.ee).
Priit Roosimägi
Head of Group Finance Unit
+372 650 1250
priit.roosimagi@merko.ee
Attachment
- Merko_Ehitus_2020_3M_interim_report
© OMX, source