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Merko Ehitus Profit Collapses 84%, Erasing 11% of Stock Value
Estonian construction giant Merko Ehitus reported its fourth-quarter net profit plummeted by 84% year-on-year, triggering a sharp stock sell-off even as the company framed the results as a predictable normalization and proposed a 1.25 euro per share dividend.
- —Merko Ehitus announced a substantial decrease in its fourth-quarter 2025 financial results, with sales revenue falling 57% year-on-year to 69.1 million euros and net profit dropping 84%, significantly missing analyst expectations.
- —For the full year 2025, Merko's turnover decreased by 42% and profit by 38% compared to the exceptionally strong performance in 2024.
- —Despite the downturn, the company proposed a dividend of 1.25 euros per share, which is lower than the previous year but aligns with its dividend policy, and maintains a strong financial position with negative net debt.
- —Merko's management attributes the decline to a return to more typical operational volumes after a period of exceptionally high results in 2024, driven by the completion of large-scale projects and contracts signed under turbulent market conditions.
- —The company secured new construction contracts worth 363 million euros in 2025, with significant projects including infrastructure for defense facilities in Lithuania and components of the Rail Baltica project.
Recap
The dramatic drop in Merko Ehitus's profit is less a sign of crisis and more an indicator of market normalization after an outlier year. While investors reacted to the steep decline, the company's fundamentals—negative net debt, a robust order book, and strategic wins in the defense sector—point to underlying resilience. The key tension is between short-term performance metrics and the firm's long-term financial health and strategic positioning.