OREANDA-NEWS. August 7, 2007. Cherkizovo Group, one of Russia’s leading integrated and diversified meat producers, today ssues its pre-close trade update in advance of its interim results for the six months ended 30June 2007, which will be announced in October 2007.

Poultry

Poultry prices have recovered strongly in the first half year of 2007. Average prices increased by 17% when compared to the first 6 months of 2006, from $2.02 to $2.36 per kg (excluding VAT). In rubles the price increased by 10% (from 55.82 rubles per kg to 61.59 rubles per kg) (excluding VAT). We expect further increases in Poultry prices.

Volumes grew in line with management’s organic growth strategy to increase production capacity. Volumes increased 43% in the first half of 2007 when compared to the first half year of 2006. As a result of investment made in previous years we expect an increase (organic growth only) of over 20% in volumes in 2007 compared to the 2006.

Pork

In line with the global trend on prices, the average pork price for the first 6 months of 2007 stabilized and decreased 5% when compared to the first 6 months of 2006, from $2.19 to $2.07 per kg (excluding VAT). In rubles the price decreased by 11% (from 60.64 rubles per kg to 54.11 rubles per kg) (excluding VAT). Looking forward, we do not expect the pork price to continue to decrease at the current pace over the next 6 months.

As our new facilities at Lipetsk are gaining momentum, volumes in the pork division doubled (increased 100.2%) in the first half year of 2007 when compared to the first half of 2006. We expect to more than double our pork division volumes in the full year 2007 when compared to 2006.

Meat processing
We continue to change the mix in our product portfolio towards high margin value-added products and to cut low margin volume drivers, in line with our strategy. This has been well reflected in our average price level for the first half year. Average prices for the first 6 months increased by 15% when compared to the first 6 months of 2006 from $2.80 to $3.22 per kg (excluding VAT). In rubles the price increased by 8.5% (from 77.42 rubles per kg to 83.98 rubles per kg) (excluding VAT). Going forward we expect further increases in the average price in the meat processing division.

Volumes within the meat processing division declined by 6% due to the decrease of low value segment products.

Current trading continues to be in line with expectations and the management is confident of a satisfactory outcome for the first half of the current financial year.