Financial performance
Nordecon delivered a gross profit of €16,770 thousand in 2024 (2023: €3,809 thousand). The group’s gross margin improved significantly, rising to 7.5% for the year (2023: 2.0%) and 9% for the fourth quarter (Q4 2023: (1)%). Profitability improved for both operating segments. The gross margin of the Buildings segment was 8.9% for the year and 10.7% for the fourth quarter (2023: 3.0% and Q4 2023: (0.3)%). The Infrastructure segment’s gross margin was lower, reaching 4.0% for the year and (0.3)% for the fourth quarter (2023: 1.3% and Q4 2023: (0.6)%). The margin improvement was supported by better mitigation of the risks associated with general contracting and the expiry in 2023 of a number of long-term contracts signed before the war, which had been severely affected by the previous years’ surge in input prices. The improved performance of the Infrastructure segment is partly due to the investment made in an asphalt concrete plant in early 2024, which has reduced the cost price of the product and represents a major step forward in material recycling.
The group’s administrative expenses for 2024 were €7,878 thousand. Administrative expenses increased by around 20% compared to 2023 (2023: €6,564 thousand). The rise resulted from staff costs, which increased due to the recognition of provisions for performance-based remuneration in connection with the group’s results for 2024. The ratio of administrative expenses to revenue (12 months rolling) was 3.5% (2023: 3.5%).
The group ended 2024 with an operating profit of €8,061 thousand (2023: an operating loss of €3,431 thousand). EBITDA for the period was €11,025 thousand and EBITDA margin was 4.9% (2023: negative EBITDA of €412 thousand and negative EBITDA margin of 0.2%).
The group’s finance income and costs are affected by exchange rate fluctuations in the group’s foreign markets, particularly movements in the exchange rate of the Ukrainian hryvnia. In 2024, the Ukrainian hryvnia weakened against the euro by around 4% and the translation of the loans provided to the group’s Ukrainian subsidiaries in euros into the local currency gave rise to a foreign exchange loss of €247 thousand (2023: a foreign exchange loss of €480 thousand). Total exchange losses for the year were €258 thousand (2023: €480 thousand).
The group’s net profit for 2024 was €5,165 thousand (2023: a loss of €6,418 thousand). The net profit attributable to owners of the parent, Nordecon AS, was €3,827 thousand (2023: a net loss of €942 thousand).
Cash flows
Operating activities produced a net cash inflow of €235 thousand in 2024 (2023: an inflow of €12,877 thousand). Operating cash flow is strongly influenced by the fact that the contracts signed with most public and private sector customers do not require them to make advance payments, while the group has to make prepayments to subcontractors and materials suppliers. Cash inflow is also reduced by contractual retentions, which extend from 5 to 10% of the contract price and are released at the end of the construction period only.
Investing activities of the period resulted in a net cash inflow of €273 thousand (2023: an outflow of €1,348 thousand). Investments in property, plant and equipment totalled €328 thousand (2023: €362 thousand) and proceeds from the sale of property, plant and equipment amounted to €319 thousand (2023: €431 thousand). Loans provided amounted to €36 thousand (2023: €531 thousand) and interest received amounted to €307 thousand (2023: €50 thousand). The cash flow for 2023 was influenced by the sale of the subsidiary Nordecon Betoon OÜ, which resulted in a net cash outflow of €970 thousand.
Financing activities generated a net cash outflow of €4,178 thousand (2023: an outflow of €6,874 thousand). The largest items were related to loans and leases. Proceeds from loans received amounted to €1,896 thousand (2023: €1,197 thousand), consisting of the use of development loans. Repayments of loans received totalled €1,633 thousand (2023: €2,291 thousand), consisting of regular repayments of long-term investment and development loans and the change in the overdraft balance. Lease payments were €2,220 thousand (2023: €3,060 thousand). Dividends paid in 2024 amounted to €1,347 thousand (2023: €1,494 thousand).
The group’s cash and cash equivalents as at 31 December 2024 amounted to €8,195 thousand (31 December 2023: €11,892 thousand).
Key financial figures and ratios
| Figure/ratio | 2024 | 2023 | 2022 |
| Revenue (€’000)* | 223,925 | 186,464 | 220,285 |
| Revenue change* | 20.1% | (15.4)% | 2.6% |
| Net profit (loss) (€’000)* | 5,165 | (6,418) | (4,099) |
| Net profit (loss) attributable to owners of the parent (€’000) | 3,827 | (942) | (3,650) |
| Average number of shares | 31,528,585 | 31,528,585 | 31,528,585 |
| Earnings per share (€) | 0.12 | (0.03) | (0.12) |
| Administrative expenses to revenue* | 3.5% | 3.5% | 2.6% |
| EBITDA (€’000)* | 11,025 | (412) | 2,791 |
| EBITDA margin* | 4.9% | (0.2)% | 1.3% |
| Gross margin* | 7.5% | 2.0% | 1.8% |
| Operating margin* | 3.6% | (1.8)% | (0.2)% |
| Operating margin excluding gain on non-current asset sales* | 3.5% | (2.0)% | (0.4)% |
| Net margin* | 2.3% | (3.4)% | (1.9)% |
| Return on invested capital | 15.6% | 8.0% | (0.5)% |
| Return on equity | 21.0% | 8.3% | (5.2)% |
| Equity ratio | 23.4% | 18.7% | 19.8% |
| Return on assets | 4.4% | 1.6% | (1.1)% |
| Gearing | 22.6% | 16.6% | 32.0% |
| Current ratio | 0.94 | 0.95 | 0.88 |
| | | | |
| At 31 December | 2024 | 2023 | 2022 |
| Order book (€’000)* | 209,489 | 216,732 | 127,618 |
* Continuing operations
Due to the sale of Nordecon Betoon OÜ and NOBE Rakennus OY at the beginning of December 2023, the comparative figures for 2023 and 2022 only include the results of the continuing operations. The results of the discontinued operation for the comparative periods are presented separately in the consolidated statement of comprehensive income within Profit for the period from a discontinued operation.
Performance by geographical market
Revenue generated outside Estonia, in Ukraine, accounted for approximately 2% of the group’s total revenue in 2024. The volume of our Ukrainian operations remained comparable to the previous year. During the period, we provided services under contracts for the reconstruction of substations and installation of associated physical protection systems in the Poltava, Zhytomyr, Volyn and Ivano-Frankivsk oblasts in Ukraine, and for the reconstruction of a building into an apartment complex for internally displaced persons in Ovruch, Zhytomyr Oblast, Ukraine. Nordecon did not generate any revenue and had no ongoing construction contracts in the Swedish market. With the sale of Nordecon Betoon OÜ at the beginning of December 2023, the group also withdrew from the Finnish market, where it had been operating through Nordecon Betoon OÜ’s subsidiary NOBE Rakennus OY. The group was active on a project basis in Latvia and Lithuania.
| | 2024 | 2023 | 2022 |
| Estonia | 98% | 97% | 97% |
| Ukraine | 2% | 2% | 1% |
| Finland | - | 1% | 0% |
| Lithuania | - | 0% | 2% |
| Latvia | - | 0% | 1% |
Performance by business line
Segment revenues
We strive to maintain a balance between the revenues of our two main operating segments (Buildings and Infrastructure) as far as market developments allow, as this helps diversify risks and provides better opportunities to continue construction activities in more challenging market conditions, where volumes in one subsegment decline sharply while volumes in another subsegment start to grow more rapidly.
The group’s revenue for 2024 was €223,925 thousand, approximately 20% higher than in 2023, when revenue from continuing operations amounted to €186,464 thousand. The Buildings segment generated revenue of €187,573 thousand and the Infrastructure segment revenue of €36,299 thousand. The corresponding figures for 2023 were €138,134 thousand and €48,263 thousand. Revenue generated by the Buildings segment increased by 36%, while revenue generated by the Infrastructure segment decreased by 25%. Revenue growth and changes in the performance of the two reportable segments were expected and in line with the group’s order book. Revenue growth in the Buildings segment was driven by higher revenue in the public buildings subsegment. The decrease in revenue in the Infrastructure segment was mainly due to delays in the start of work on the Rail Baltica contracts and reduced investment by the Transport Administration.
| Revenue by operating segment | 2024 | 2023 | 2022 | |
| Buildings | 84% | 74% | 84% | |
| Infrastructure | 16% | 26% | 16% | |
Subsegment revenues
In the Buildings segment, revenue from the public buildings and commercial buildings subsegments increased by 80% and 72%, respectively, while revenue from the industrial and warehouse facilities subsegment and the apartment buildings subsegment decreased compared to the previous year. As the revenue contribution of the industrial and warehouse facilities subsegment was also modest in previous years, its revenue decline did not have a significant impact on total segment revenue. However, revenue from the apartment buildings subsegment fell by 57%, mainly due to lower construction services revenue, reflecting the current market situation in this subsegment.
The period’s largest projects in the public buildings subsegment were the construction of the main building of the Estonian Internal Security Service and Loodusmaja (Nature Hub) in Tallinn, the design and construction of warehouse complexes for the Centre for Defence Investment in Luunja and Nõo rural municipalities in Tartu County and in Ida-Viru County, the design and construction of a new study and sports building for the Saku Upper Secondary School near Tallinn, the reconstruction of the building of the Karlova School in Tartu and the design and construction of a study building for the Centre for Defence Investment on the Raadi campus in Tartu.
Revenue generated by the apartment buildings subsegment consisted of revenue from the construction of the commercial and residential complex Vektor and the group’s own development projects. Revenue from our own development activities decreased compared to the previous year and was €7,685 thousand (2023: €10,273 thousand). The figure includes revenue from the sale of apartments in Tartu – in the Mõisavahe Kodu housing estate and the centrally located Emajõe Residents housing estate on the banks of the Emajõgi river (https://emajoeresidents.ee). We continued to build 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). Both development projects will be completed in the first half of 2025. In carrying out our own development activities, we carefully monitor potential risks in the housing development market.
The largest ongoing projects in the commercial buildings subsegment were the construction of the commercial and residential complex Vektor and the LEED Gold compliant Golden Gate office building at Ahtri 6 in Tallinn, the design and construction of a commercial building at Nõlvakaare 4 at Raadi in Tartu County, and the construction of a Lidl store in Võru.
A significant share of the revenue generated by the industrial and warehouse facilities subsegment came from the reconstruction of substations and installation of associated physical protection systems in the Poltava, Zhytomyr, Volyn and Ivano-Frankivsk oblasts in Ukraine.
| Buildings segment | 2024 | 2023 | 2022 |
| Public buildings | 70% | 37% | 30% |
| Commercial buildings | 21% | 23% | 24% |
| Apartment buildings | 6% | 27% | 28% |
| Industrial and warehouse facilities | 3% | 13% | 18% |
The largest revenue contributor in the Infrastructure segment was the road construction and maintenance subsegment whose revenue decreased by around 22% compared to the previous year. A major share of its revenue came from the construction of an armoured manoeuvre shooting range and roads in Harju County, the reconstruction of the Mäeküla–Koeru–Kapu road section, the construction of the Tagadi ecoduct (wildlife crossing) on the Rail Baltica route and the provision of road maintenance services in Järva County.
| Infrastructure segment | | 2024 | 2023 | 2022 |
| Road construction and maintenance | | 90% | 63% | 78% |
| Other engineering | | 10% | 30% | 20% |
| Specialist engineering | | 0% | 0% | 2% |
| Environmental engineering | | 0% | 7% | 0% |
Order book
The group’s order book (backlog of contracts signed but not yet performed) as at 31 December 2024 stood at €209,489 thousand. Compared to the end of 2023, the order book has decreased by around 3%. In 2024, we signed new contracts for €181,437 thousand, of which €49,636 thousand in the fourth quarter (2023: €276,901 thousand and Q4 2023: €85,575 thousand).
In terms of the breakdown of the order book between the two main operating segments, the share of the Infrastructure segment has increased compared to the end of last year. The Buildings segment accounts for 82% and the Infrastructure segment for 18% of the group’s order book (31 December 2023: 96% and 4%, respectively). The order book of the Buildings segment includes mainly contracts secured in the commercial and public buildings subsegments. Public investment in building construction has declined overall, with some activity at local government level. The stabilisation of construction input prices and the decline in interest rates have not yet significantly boosted private investment. Compared to 31 December 2023, the order book of the Buildings segment has declined by 17% and the order book of the Infrastructure segment has almost quadrupled, mainly due to the award of a Rail Baltica contract.
| At 31 December | 2024 | 2023 | 2022 |
| Order book (€’000)* | 209,489 | 216,732 | 127,618 |
*Continuing operations
Major contracts secured in 2024 include:
-
the construction of an armoured manoeuvre shooting range and roads for the Centre for Defence Investment in Harju County with an approximate cost of €5,450 thousand;
-
the construction of a modern war and disaster medicine centre for the Centre for Defence Investment in Tartu with an approximate cost of €15,000 thousand (the group is one of the joint bidders);
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the construction of a Lidl store in Võru with an approximate cost of €3,900 thousand;
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the construction of a platform area for Class E aircraft at Tallinn Airport with an approximate cost of €7,500 thousand;
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the construction of a building complex in the Port Athena quarter at Väike-Turu 7 in Tartu (the complex consists of four six-storey buildings, one seven-storey building and a common basement level used mainly for parking) with an approximate cost of €26,000 thousand;
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the construction of the Hagudi-Alu section of stage III of the Rail Baltica Raplamaa main line railway infrastructure with an approximate cost of €30,500 thousand;
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the construction of the LEED Gold standard Uusküla spa hotel on the northern shore of Lake Peipus in Alutaguse rural municipality with an approximate cost of €28,300 thousand;
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the reconstruction of a building into an apartment complex for internally displaced persons in Ovruch, Zhytomyr Oblast, Ukraine with an approximate cost of €1,800 thousand;
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the construction of a new television building for Estonian Public Broadcasting in Tallinn with an approximate cost of €40,100 thousand;
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the renovation of the Tallinn Art Hall building at Vabaduse 6/8 in Tallinn with an approximate cost of €7,990 thousand.
Based on the size of the order book and 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 company and the subsidiaries) in 2024 was 435, including 281 engineers and technical professionals (ETP). Headcount decreased by around 22% compared to the previous year. The decline in the number of staff was influenced by the restructuring of the Infrastructure segment, which was completed in 2023, and the sale of Nordecon Betoon OÜ and NOBE Rakennus OY at the beginning of December 2023.
Average number of employees at group companies (the parent company and the subsidiaries):
| | 2024 | 2023 | 2022 |
| ETP | 281 | 374 | 432 |
| Workers | 154 | 184 | 226 |
| Total average | 435 | 558 | 658 |
The group’s staff costs for 2024, including all taxes, were €24,170 thousand compared with €19,637 thousand for continuing operations in 2023. The main growth drivers were performance-based compensation, which increased due to the group’s improved performance, and salary increases.
Remuneration of the council and the board
In 2024, the service fees of the members of the council of Nordecon AS totalled €199 thousand and the related social security charges amounted to €66 thousand (2023: €179 thousand and €59 thousand, respectively).
During the period, the group recognised a liability for the performance-based compensation of the members of the council of €198 thousand (2023: €0) and the related social security charges of €65 thousand. Of the liability, €125 thousand will be paid out in 2025 and the payment of the remainder is linked to the achievement of the targets for 2025.
The service fees of the members of the board of Nordecon AS totalled €524 thousand and the related social security charges amounted to €173 thousand (2023: €775 thousand and €255 thousand, respectively). The fees for 2023 include benefits of €222 thousand paid in connection with the expiry of a service contract of a member of the board.
During the period, the group recognised a liability for the performance-based compensation of the members of the board of €741 thousand (2023: €0) and the related social security charges of €245 thousand. Of the liability, €467 thousand will be paid out in 2025 and the payment of the remainder is linked to the achievement of the targets for 2025.
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:
| | 2024 | 2023 | 2022 |
| Nominal labour productivity (rolling), (€’000) | 514.3 | 499.3 | 490.4 |
| Change against the comparative period, % | 3.0% | 1.8% | 16.5% |
| | | | |
| Nominal labour cost efficiency (rolling), (€) | 9.3 | 10.3 | 11.8 |
| Change against the comparative period, % | (9.7)% | (13.4)% | (2.9)% |
The group’s nominal labour productivity increased compared to the previous year, mainly due to a decrease in the number of staff. Labour cost efficiency decreased due to a decline in revenue.
Andri Hõbemägi
Nordecon AS
Head of Investor Relations
Tel: +372 6272 022
Email: andri.hobemagi@nordecon.com
www.nordecon.com
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