OREANDA-NEWS. On February 18, 2008 Cherkizovo Group OJSC ("Cherkizovo" or the "Company"), one of Russia's leading integrated and diversified meat producers, issued a pre-close trade update in advance of its annual results for the year ended 31 December 2007, which will be announced in April 2008, reported the press-centre of Cherkizovo Group.
 
Poultry Division
In 2007 total sales volume growth in the poultry division was up 28% compared to 2006 from 69,000 in 2006 to 88,000 tonnes in 2007, exceeding management's expectations. This excludes 2007 sales volumes from Chicken Kingdom, which was acquired at the end of August 2007, which were in line with expectations at approximately 80,000 tonnes for 2007. 

The sales volumes for Chicken Kingdom for the last four months, which will be consolidated into the Cherkizovo annual accounts for 2007, were approximately 29,000 tonnes. On a combined pro-forma basis, Cherkizovo Group and the Chicken Kingdom sales volumes in 2007 were approximately 167,000 tonnes. This establishes Cherkizovo as one of the market leaders in the Russian poultry segment.

In 2008 the Company currently expects to increase sales volumes up to approximately 175,000 tonnes.
Throughout 2007, the environment for poultry sales remained favorable. Excluding Chicken Kingdom, prices for Cherkizovo sales increased by 18% from $2,15 per kg in 2006 to $2,52 in 2007 (excluding VAT). In rubles, prices increased by 11% from 58,30 rubles per kg in 2006 to 64,58 rubles per kg in 2007 (excluding VAT). The average Chicken Kingdom price increased by 29% to $1,96 per kg in 2007 compared to $1,52 in 2006.
 
Pork Division
Following the increase in capacity at the first two modules at Lipetsk sales volumes in the Pork Division more than doubled (2,3 times) to approximately 28,000 tonnes in 2007 from 12,000 tonnes in 2006.

For 2008 the Company currently expects to increase total pork volumes to a level of approximately 40,000 tonnes, taking into account a slower construction schedule on the Lipetsk site in 2007.  The expected upside impact from the increased volumes at the Lipetsk site will flow through into the second half of 2008 as the 3rd and 4th modules come online.

During 2008 the Company is considering filling 2 sow sites in Tambov. Therefore by the end of 2008 we expect both the Lipetsk and Tambov sites to be running on full capacity.

Throughout 2007 pork price movement exceeded management's expectations. Prices increased by 7% in 2007 from $2,14 per kg of live weight in 2006 to $2,30 per kg of live weight in 2007 (excluding VAT). In rubles, prices increased by 1% in 2007, from 58,16 rubles per kg in 2006 to 58,80 rubles per kg in 2007 (excluding VAT).
 
Meat Processing Division
Cherkizovo Meat Processing Division product portfolio mix has continued to move with the demands of the marketplace towards higher margin, value-added products. As a result we have increased sales volumes of premium high margin products such as raw-smoked, cooked smoked sausages, deli and meat retail format and decreased low value, low segment products which are low margin volume drivers.

As a result average prices in the Meat Processing Division increased by 15% from $2,97 per kg in 2006 to $3,42 per kg in 2007 (excluding VAT). In rubles the price increased by 8% from 80.80 rubles in 2006 to 87,41 rubles in 2007 (excluding VAT).

Year-on-year sales volumes in the Meat Processing Division slightly decreased by 4% due to a decrease in the low margin volume drivers. The company expects a slight sales volume increase in 2008 mostly due to the increasing volumes of semi finished and raw meat products coming from our regional slaughter facilities.

Overall, management was satisfied with the Group's performance in 2007.