Merko Ehitus Reports 2025 Revenue Drop Amid Geopolitical Uncertainty
Event summary
- Merko Ehitus reported a 42% revenue decline in 2025, down to €311 million from €539 million in 2024.
- The company secured its largest-ever contracts in Lithuania for the Rūdninkai defence campus, set to contribute to revenue from 2026.
- Connecto, a joint venture, accounted for 25% of Merko’s consolidated net profit in 2025.
- Residential construction starts in Estonia and Latvia tripled in 2025 compared to 2024.
- Net profit fell 38% to €39.9 million in 2025 from €64.6 million in 2024.
The big picture
Merko Ehitus's 2025 results reflect broader trends of public sector-driven investments in defense and infrastructure amid private sector caution. The company's strategic pivot towards PPP models and joint ventures like Connecto highlights a shift towards stable, long-term revenue streams. The tripling of residential construction starts in Estonia and Latvia signals potential upside in real estate development, though geopolitical risks remain a wildcard.
What we're watching
- Revenue Recovery
- Whether the Rūdninkai defence campus contracts can offset the revenue decline in 2026.
- Real Estate Momentum
- The pace at which pre-sales agreements convert into completed projects in Estonia and Latvia.
- Geopolitical Impact
- How ongoing global turbulence affects private investment and public sector spending in the Baltic region.
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