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Cherkizovo Group Pre-close Trading Update

Cherkizovo Group, one of Russia's leading integrated and diversified meat producers, today issues a pre-close trade update in advance of its interim results for the six months ended 30 June 2006, which will be announced in October 2006.

Meat processing

In line with our stated strategy, we continue to change the mix in our product portfolio toward high margin value-added products. This has been well reflected in our average price for the first half year. The average price for the first 6 months increased by almost 12% compared to the first 6 months of 2005. We expect further increase in the average price in the meat processing division.

Volumes within the meat processing division are in line with management expectations. We expect volumes to stay flat compared to the last year. In the first 6 months, we increased volumes of premium high margin products such as semi-smoked, cooked smoked sausages, deli and meat retail format and decreased low value low segment products. In addition, we managed to increase significantly volumes of raw meat products sold to McDonalds and Metro.

In the next 6 months of 2006 we will continue to implement our strategy of further expanding our network of regional trading houses. One example is the previously announced opening of our new Trading House in Ufa city in August. This facility will enable the Company to strengthen its position in Bashkortostan, one of the richest meat-producing regions in Russia, and to further develop our partnership with retail which will further increase the share of premium high margin products in our portfolio.

Poultry

Despite the impact of avian flu, which has negatively affected world poultry prices, in the first half of this year we saw only a 6% decrease in average price compared to the first half year of 2005. Taking into account the current market conditions we expect the poultry prices to go up and we have already seen price increase in July and August. By the end of 2006 we expect our average price to increase further and reach the level present on the market in 2005 before the influenza affect.

For the first half year, volumes were in line with management's strategy to increase production capacity. Volumes increased by 20% in the first half of 2006 compared to the first half year of 2005. We expect an increase of over 40% in production capacity in the second half of the year and approximately over 30% volume growth in 2006 compared to the 2005 as a result of investment made in previous years.

Pork

Following the trend of the world prices, average pork prices for the first 6 months of 2006 increased 27% compared to the first 6 months of 2005, exceeding management's expectations. However, we do not expect the pork price increase to continue at the current pace in the next 6 months. Taking into account our first half, we expect pork price to increase over 20% compared with 2005.

In the pork division, volumes increased by 5% compared to the first half of 2005. This year we do not expect volumes to increase our old facilities. Our new facility at Lipeck, as expected, will start producing significant output next year.

Overall, management is confident of a satisfactory outcome for the first half of the current financial year.