Interim / Quarterly Report • Aug 7, 2025
Interim / Quarterly Report
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2025 II quarter and 6 months consolidated interim report (unaudited)
The Estonian economy continues to grow slowly, with the latest forecasts
estimating annual economic growth at 1.2%. The construction market is showing
signs of stabilisation. Within the buildings segment, there are indications of a
slight increase in orders from the private sector. Public sector volumes are
being supported by orders from local governments and the Estonian Centre for
Defence Investment. The infrastructure segment is also being supported by the
volume of Rail Baltica works this year, whereas investments by the Transport
Administration have not recovered.
During the period, revenues generated by both group's main operating segments
decreased compared to the first six months of 2024. The Buildings segment
accounted for 89% of the group's total revenue, while the Infrastructure
segment's contribution decreased slightly (H1 2025: 11%; H1 2024: 13%). In the
first half of the year, the group secured a significant number of new contracts,
the impact of which will be reflected in revenue over a longer period.
The group's gross margin was 5.9% and operating margin was 2.3%. Net profit for
the period was primarily affected by the foreign exchange loss resulting from
the weakening of the Ukrainian hryvnia against the euro.
Compared to 30 June 2024, the group's order book grew by 70%. The order books of
both the Buildings and the Infrastructure segments increased. A significant
portion of the order book comprises work scheduled for 2026 and 2027.
Condensed consolidated interim statement of financial position
ASSETS
Current assets
Cash and cash equivalents 9,326 8,195
Trade and other receivables 38,683 29,449
Prepayments 2,701 3,543
Inventories 24,068 28,091
Total current assets 74,778 69,278
Non-current assets
Other investments 77 77
Trade and other receivables 10,809 10,681
Investment property 5,517 5,517
Property, plant and equipment 13,102 13,247
Intangible assets 14,927 14,951
Total non-current assets 44,432 44,473
TOTAL ASSETS 119,210 113,751
LIABILITIES
Current liabilities
Borrowings 12,432 12,626
Trade payables 45,621 36,819
Other payables 10,087 10,260
Deferred income 12,665 12,472
Provisions 1,039 1,333
Total current liabilities 81,844 73,510
Non-current liabilities
Borrowings 3,811 5,720
Trade payables 3,023 5,091
Provisions 2,984 2,826
Total non-current liabilities 9,818 13,637
TOTAL LIABILITIES 91,662 87,147
EQUITY
Share capital 14,379 14,379
Own (treasury) shares (660) (660)
Share premium 635 635
Statutory capital reserve 2,554 2,554
Translation reserve 4,507 4,034
Retained earnings 4,612 4,746
Total equity attributable to owners of the
parent 26,027 25,688
Non-controlling interests 1,521 916
TOTAL EQUITY 27,548 26,604
TOTAL LIABILITIES AND EQUITY 119,210 113,751
Condensed consolidated interim statement of comprehensive income
Revenue 92,638 53,283 114,945 68,700 223,925
Cost of sales (87,188) (49,635) (107,751) (63,644) (207,155)
Gross profit 5,450 3,648 7,194 5,056 16,770
Marketing and distribution
expenses (169) (86) (172) (104) (422)
Administrative expenses (3,072) (1,526) (3,373) (1,809) (7,878)
Other operating income 68 16 77 51 286
Other operating expenses (160) (126) (458) (312) (695)
Operating profit 2,117 1,926 3,268 2,882 8,061
Finance income 258 113 317 180 678
Finance costs (1,904) (1,165) (1,546) (841) (3,011)
Net finance costs (1,646) (1,052) (1,229) (661) (2,333)
Profit before tax 471 874 2,039 2,221 5,728
Income tax expense 0 0 (237) (237) (563)
Profit for the period 471 874 1,802 1,984 5,165
Other comprehensive income
Items that may be reclassified
subsequently to
profit or loss
Exchange differences on
translating foreign operations 473 569 165 114 248
Total other comprehensive
income 473 569 165 114 248
TOTAL COMPREHENSIVE INCOME 944 1,443 1,967 2,098 5,413
Profit (loss) attributable to:
Owners of the parent (134) 482 1,020 1,613 3,827
Non-controlling interests 605 392 782 371 1,338
Profit for the period 471 874 1,802 1,984 5,165
Comprehensive income
attributable to:
Owners of the parent 339 1,051 1,185 1,727 4,075
Non-controlling interests 605 392 782 371 1,338
Comprehensive income for the
period 944 1,443 1,967 2,098 5,413
Earnings per share attributable
to owners of the parent:
Basic earnings per share (EUR) (0.00) 0.02 0.03 0.05 0.12
Diluted earnings per share (EUR) (0.00) 0.02 0.03 0.05 0.12
Condensed consolidated interim statement of cash flows
Cash flows from operating activities
Cash receipts from customers 104,987 121,573
Cash paid to suppliers (88,153) (100,334)
VAT paid (3,252) (4,746)
Cash paid to and for employees (10,282) (10,142)
Income tax paid (350) (237)
Net cash from operating activities 2,950 6,114
Cash flows from investing activities
Paid for acquisition of property, plant and equipment (198) (257)
Proceeds from sale of property, plant and equipment 394 78
Loans provided (41) (18)
Repayments of loans provided 4 1
Dividends received 0 6
Interest received 61 138
Investments in long-term deposits (300) (250)
Net cash used in investing activities (80) (302)
Cash flows from financing activities
Proceeds from loans received 783 468
Repayments of loans received (640) (3,392)
Payments of lease principal (1,247) (1,091)
Payments of lease interest (134) (177)
Interest paid (398) (368)
Dividends paid 0 (661)
Other payments 0 50
Net cash used in financing activities (1,636) (5,171)
Net cash flow 1,234 641
Cash and cash equivalents at beginning of period 8,195 11,892
Effect of movements in foreign exchange rates (103) (20)
Change in cash and cash equivalents 1,234 641
Cash and cash equivalents at end of period 9,326 12,513
Financial review
Financial performance
In the first half of 2025, Nordecon delivered a gross profit of EUR5,450 thousand
(H1 2024: EUR7,194 thousand). The group's gross margin decreased slightly year on
year, dropping to 5.9% for the first half of the year (H1 2024: 6.3%) and 6.8%
for the second quarter (Q2 2024: 7.4%).
The Buildings segment earned a profit in both the first half and the second
quarter of the year, the respective gross margins being 7.4% and 7.2% (H1 and Q2
2024: 7.7%). The Infrastructure segment ended the first half of the year with a
gross loss of EUR49 thousand and a gross margin of (0.5)% (H1 2024: 0.9%), but
earned a gross profit of EUR631 thousand in the second quarter, with a gross
margin of 8.2% (Q2 2024: 8.5%).
The group's administrative expenses for the first half of 2025 totalled EUR3,072
thousand, which is around 9% lower than a year earlier (H1 2024: EUR3,373
thousand). This was mainly due to a decline in staff costs. The ratio of
administrative expenses to revenue (12 months rolling) increased year on year,
rising to 3.8% (H1 2024: 3.2%) due to lower revenue.
The group's operating profit for the first half of 2025 was EUR2,117 thousand (H1
2024: 3,268 thousand) and EBITDA was EUR3,435 thousand (H1 2024: EUR4,690 thousand).
The group's finance income and costs are affected by exchange rate fluctuations
in the group's foreign markets. In the first half of 2025, the exchange rate of
the Ukrainian hryvnia weakened against the euro by around 10%, while the
exchange rate of the Swedish krona strengthened against the euro by around
2.8%. As a result, the translation of the loans provided to the group's
Ukrainian and Swedish subsidiaries in euros into the local currencies gave rise
to an exchange loss of EUR652 thousand (H1 2024: EUR163 thousand) and an exchange
gain of EUR11 thousand (H1 2024: no exchange gain or loss), respectively.
The group ended the period with a net profit of EUR471 thousand (H1 2024: EUR1,802
thousand). The loss attributable to owners of the parent, Nordecon AS, was EUR134
thousand (H1 2024: a profit of EUR1,020 thousand).
Cash flows
The group's operating activities produced a net cash inflow of EUR2,950 thousand
in the first half of 2025 (H1 2024: an inflow of EUR6,114 thousand). The items
with the strongest impact on operating cash flow were receipts from customers
and cash paid to suppliers, which decreased due to the decline in revenue.
Investing activities resulted in a net cash outflow of EUR80 thousand (H1 2024: an
outflow of EUR302 thousand). Payments made to acquire property, plant and
equipment totalled EUR198 thousand (H1 2024: EUR257 thousand) and proceeds from the
sale of property, plant and equipment amounted to EUR394 thousand (H1 2024: EUR78
thousand). Loans provided amounted to EUR41 thousand (H1 2024: EUR18 thousand),
interest received to EUR61 thousand (H1 2024: EUR138 thousand) and investments in
long-term deposits to EUR300 thousand (H1 2024: EUR250 thousand).
Financing activities generated a net cash outflow of EUR1,636 thousand (H1 2024:
an outflow of EUR5,171 thousand). Proceeds from loans received amounted to EUR783
thousand, consisting mainly of the use of development loans (H1 2024: EUR468
thousand). Repayments of loans received totalled EUR640 thousand (H1 2024: EUR3,392
thousand). Lease payments amounted to EUR1,247 thousand (H1 2024: EUR1,091 thousand)
and interest payments to EUR398 thousand (H1 2024: EUR368 thousand). There were no
dividend payments in the reporting period, whereas dividends paid in the first
half of 2024 amounted to EUR661 thousand.
At 30 June 2025, the group's cash and cash equivalents amounted to EUR9,326
thousand (30 June 2024: EUR12,513 thousand).
Key financial figures and ratios
Revenue (EUR'000) 92,638 114,945 86,526 223,925
Revenue change (19)% 33% (15)% 20.1%
Net profit (loss) (EUR'000) 471 1,802 (2,299) 5,165
Net profit (loss)
attributable to owners of
the parent (EUR'000) (134) 1,020 (2,493) 3,827
Weighted average number of
shares 31,528,585 31,528,585 31,528,585 31,528,585
Earnings per share (EUR) 0.00 0.03 (0.08) 0.12
Administrative expenses to
revenue 3.3% 2.9% 3.4% 3.5%
Administrative expenses to
revenue (rolling) 3.8% 3.2% 3.0% 3.5%
EBITDA (EUR'000) 3,435 4,690 1,149 11,025
EBITDA margin 3.7% 4.1% 1.3% 4.9%
Gross margin 5.9% 6.3% 3.2% 7.5%
Operating margin 2.3% 2.8% (0.5)% 3.6%
Operating margin excluding
gain on asset sales 2.2% 2.8% (0.7)% 3.5%
Net margin 0.5% 1.6% (2.7)% 2.3%
Return on invested capital 2.0% 6.2% (1.0)% 15.6%
Return on equity 1.7% 7.8% (6.1)% 21.0%
Equity ratio 23.1% 19.2% 17.1% 23.4%
Return on assets 0.4% 1.5% (1.1)% 4.4%
Gearing 15.8% 6.9% 30.0% 22.6%
Current ratio 0.91 0.88 0.89 0.94
Order book (EUR'000) 303,914 178,799 155,133 209,489
Performance by geographical market
In the first half of 2025, revenue generated outside Estonia accounted for
approximately 2% of the group's total revenue, consisting solely of revenues
generated in Ukraine. We continue to provide services in Ukraine under contracts
signed in 2023 for the reconstruction of substations and the installation of
associated physical protection systems in the Poltava, Zhytomyr, Volyn and
Ivano-Frankivsk oblasts. Work in these areas is taking longer than originally
planned and depends on the needs of the national grid. We are also converting a
building in Ovruch, in the Zhytomyr oblast, into an apartment complex for
internally displaced persons and restoring the administrative building of the
Kyiv TV Tower. No revenue was generated in Sweden during the period under
review, as Nordecon had no construction contracts in progress in the Swedish
market.
H1 2025 H1 2024 H1 2023 2024
Estonia 98% 98% 98% 98%
Ukraine 2% 2% 1% 2%
Finland - - 1% -
Performance by business line
Segment revenues
The group's goals include maintaining a balance between the revenues of our two
main operating segments (Buildings and Infrastructure), where market conditions
permit. This helps us to diversify risk and provides better opportunities to
continue construction activities in challenging market conditions where, for
example, volumes in one subsegment decline sharply while volumes in another
start to grow more rapidly.
The group's revenue for the first half of 2025 was EUR92,638 thousand,
approximately 19% lower than in the first half of 2024, when revenue amounted to
EUR114,945 thousand. The Buildings segment generated revenue of EUR82,127 thousand
and the Infrastructure segment revenue of EUR10,501 thousand. The corresponding
figures for the first half of 2024 were EUR100,421 thousand and EUR14,486 thousand.
Revenues from both segments decreased: by 18% for the Buildings segment and by
28% for the Infrastructure segment. The changes, as well as the distribution of
revenue between segments, were expected.
Buildings 89% 87% 77% 84%
Infrastructure 11% 13% 23% 16%
Subsegment revenues
In the first half of 2025, most of the revenue generated by the Buildings
segment came from the public and commercial buildings subsegments, with
commercial buildings contributing at their highest level in recent years.
Revenue from commercial buildings increased by around 35% year on year, while
revenue from public buildings decreased by around 47%. Revenue from the
apartment buildings subsegment, which resulted from our own property development
operations, also declined.
The largest projects in the public buildings subsegment were the design and
construction of a new study and sports building for the Saku Upper Secondary
School near Tallinn, the design and construction of a study building for the
Estonian Centre for Defence Investment on the Raadi campus in Tartu and the
construction of Loodusmaja (Nature Hub) in Tallinn.
The largest projects in the commercial buildings subsegment were the
construction of the LEED Gold compliant Golden Gate office building at Ahtri 6
in Tallinn, a commercial building at Väike-Turu 7 in Tartu, the LEED Gold
compliant Uusküla spa hotel on the northern shore of Lake Peipus in Alutaguse
rural municipality and Lidl stores in Võru and Viljandi.
Half-year revenue from our own property development operations, which is
reported in the apartment buildings subsegment, remained comparable to the same
period last year, amounting to EUR6,781 thousand (H1 2024: EUR6,174 thousand). The
figure includes revenue from the sale of apartments in phase 1 of the Seileri
Kvartal housing estate in Pärnu (https://seileri.ee) and the Tammepärja Kodu
housing estate in the Tammelinn district in Tartu (https://tammelinn.ee).
Preparations for and construction of the next phases are underway in both
developments. In carrying out our own development activities, we carefully
monitor potential risks in the housing development market.
Public buildings 46% 68% 33% 70%
Commercial buildings 41% 20% 25% 21%
Apartment buildings 12% 9% 31% 6%
Industrial and warehouse facilities 1% 3% 11% 3%
The largest revenue contributor in the Infrastructure segment is still the road
construction and maintenance subsegment, whose revenue decreased by around 30%
compared to the same period last year. A major share of the subsegment's revenue
came from the construction of the Hagudi-Alu section of stage III of the Rail
Baltica Rapla County main line railway infrastructure and the provision of road
maintenance services in Järva County. Most of the other engineering revenue
resulted from the construction of a platform area for Class E aircraft at
Tallinn Airport.
Road construction and maintenance 70% 93% 65% 90%
Other engineering 30% 7% 20% 10%
Environmental engineering 0% 0% 15% 0%
Order book
The group's order book (backlog of contracts signed but not yet performed) stood
at EUR303,914 thousand at 30 June 2025. Compared to the same period last year, the
order book has increased by 70%. In the first half of the year, we signed new
contracts for EUR172,236 thousand (H1 2024: EUR64,030 thousand), of which EUR60,960
thousand in the second quarter (Q2 2024: EUR46,413 thousand).
Order book (EUR'000) 303,914 178,799 155,133 209,489
At 30 June 2025, the Buildings segment accounted for 70% and the Infrastructure
segment for 30% of the group's total order book (30 June 2024: 90% and 10%,
respectively). Compared to 30 June 2024, the order book of the Buildings segment
has grown by 31%, driven by increases in the order books of the public and
commercial buildings subsegments. The order book of the Infrastructure segment
has also increased significantly, driven by the Rail Baltica contracts. The Rail
Baltica projects support the order book of the Infrastructure segment in a
situation where investment by the Transport Administration is declining year by
year. The volume of public investment in the order book of the Buildings segment
has also decreased. There is some activity at the local government level and in
the national defence sector. The private sector is showing signs of recovery.
Major contracts secured in the first half of 2025 include:
* Construction of a spa hotel and a swimming complex in Viljandi with an
approximate cost of EUR30,000 thousand.
* Construction of the Punamütsike Kindergarten in Võru with an approximate
cost of EUR6,370 thousand.
* Construction of the Selja-Tootsi section of stage I of the Rail Baltica
Pärnu County main line railway infrastructure with an approximate cost of
EUR62,300 thousand.
* Design and construction of a barracks at the Tapa Army Base for the Estonian
Centre for Defence Investment with an approximate cost of EUR5,300 thousand.
* Design and construction of a building for the Estonian Centre for Defence
Investment in Harju County with an approximate cost of EUR3,700 thousand.
* Construction of the Tiskre School in Harku rural municipality with an
approximate cost of EUR14,500 thousand.
* Design and construction of a technological warehouse for Cristella in Võru
with an approximate cost of EUR4,000 thousand.
* Design and construction of buildings for the Estonian Centre for Defence
Investment with an approximate cost of EUR34,300 thousand.
Based on the size of the order book and its distribution over the years, as well
as the general outlook for the economy and the construction market, the group's
management expects business volumes in 2025 to remain broadly at the same level
as in 2024. In a highly competitive environment, we have avoided taking
unjustified risks that could materialise during the contract execution phase and
adversely affect the group's results. The main focus is on managing fixed costs,
increasing productivity and effectively executing pre-construction and design
activities to leverage our professional competitive advantages.
People
Employees and staff costs
The average number of the group's employees (at the parent and the subsidiaries)
in the first half of 2025 was 418, including 267 engineers and technical
professionals (ETP). Compared to the same period last year, the number of
employees decreased by around 3%.
Average number of employees at group companies (the parent company and the
subsidiaries):
ETP 267 282 384 283
Workers 151 148 188 152
Total average 418 430 572 435
The group's staff costs for the first half of 2025, including all taxes, were
EUR9,221 thousand compared with EUR10,127 thousand in the first half of 2024. Staff
costs declined by around 9%.
In the first half of 2025, the service fees of the members of the council of
Nordecon AS totalled EUR106 thousand and the related social security charges
amounted to EUR35 thousand (H1 2024: EUR100 thousand and EUR33 thousand,
respectively).
The service fees of the members of the board of Nordecon AS totalled EUR281
thousand and the related social security charges amounted to EUR93 thousand (H1
2024: EUR264 thousand and EUR87 thousand, respectively).
Labour productivity and labour cost efficiency
We measure the efficiency of our operating activities using the following
productivity and efficiency indicators, which are based on the number of
employees and the staff costs incurred:
Nominal labour productivity (rolling), (EUR'000) 469.7 553.9 488.3 514.03
Change against the comparative period, % (15.2)% 13.4% 3.9% 3.0%
Nominal labour cost efficiency (rolling), (EUR) 8.7 11.0 11.0 9.3
Change against the comparative period, % (21.3)% 0.4% (11.0)% (9.7)%
The group's nominal labour productivity and nominal labour cost efficiency
decreased year on year because the decline in revenue outstripped the decrease
in staff numbers and costs.
Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: [email protected] (mailto:[email protected])
www.nordecon.com (http://www.nordecon.com)
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