Due to the extensive changes in the economic environment and on the
construction market, the management and supervisory boards of AS Merko Ehitus
have reviewed the corporate strategy and established the group's strategic
targets for 2010 to 2015.
The strategy covers the period from this year until the end of 2015. All the
main principles and some of the financial targets, such as the minimum equity
ratio, must be applied or met throughout the defined period.
The detailed strategy is based on the following estimates and assumptions about
Baltic economy:
- There will be no economic growth in 2010; the construction sector will
experience a fall by max. 10%;
- In the coming years (2011 and 2012), economic growth will not exceed 3%, as
estimated by different experts;
- The main clients in the coming years will come from the public sector where
focus will be on infrastructure projects co-financed by the EU funds;
- Since the public sector lacks the financial means for investment, there will
be more extensive application of PPP models;
- There will be more projects related to the improvement of energy performance;
- There will be more activity on the apartment market, compared to the slump in
recent years;
- There will be an increased demand for industrial facilities;
- The availability of credit/loans will improve;
- Starting 2011, unemployment rates will decrease and the retail business will
enter the phase of recovery.
AS Merko Ehitus strategic targets:
- The vision of AS Merko Ehitus is to provide its clients with high-quality
construction services in various fields.
- AS Merko Ehitus aims to be the leading construction company on its home
market - in the Baltic countries.
- In addition to the home market, AS Merko Ehitus has identified Ukraine
(especially Kiev) and St. Petersburg in Russia as its prospective markets.
- Outside of the above-mentioned markets, the company will only provide
construction/development services for clients that Merko has cooperated with in
the past or that require a facility similar to previous
construction/development projects successfully executed by Merko.
- In 2015, turnover from Estonian operations would constitute approx. 35% of
the consolidated turnover; turnover from Latvian operations, Lithuanian
operations, and other markets would account for approx. 30%, 25% and 10%,
respectively, of the consolidated turnover. The division of profit between the
different markets is expected to be more or less similar to the division of
turnover.
- In addition to current construction and design-engineering services, the
company will offer an even more comprehensive service covering the entire
process, from helping to find the suitable plot of land to helping the client
obtain financing.
AS Merko Ehitus long-term financial targets:
- To ensure that the average annual return on equity (ROE) of the group between
2011 and 2015 is at least 15%;
- To ensure that the group's equity ratio is at least 40% throughout the entire
period.
In order to fulfil our targets:
1. We will look for opportunities to acquire holdings in successful companies,
especially in Lithuania and Latvia.
2. We will restructure the group's management system with the help of the
following methods, above all:
- We will add a fifth member to the management board; their responsibilities
will initially include foreign markets and development activities;
- We will launch several new activities in order to improve horizontal
cooperation between the different companies in the group, and in order to
utilise the engineering know-how and management expertise (acquired in
different countries) in the different functions of the group;
- As the final outcome of the restructuring, we envision a publicly traded
holding company which has divisions in all countries where the group has
permanent operations, controlled through locally registered entities.
3. We will preserve the core of the motivational system, which has proved to be
effective so far, and will enhance the system in line with our set targets.
Alar Lagus
Member of Management Board
+372 6 805 109
alar.lagus@merko.ee