Ukrproduct Regulatory News (UKR)

27 Jun 2006 07:00

Ukrproduct Group Ltd27 June 2006 27 June 2006 Ukrproduct Group Limited ("Ukrproduct" or the "Company") Trading Update At the preliminary results on 25 April 2006, the Company referred to theunpredictability within the Ukrainian economy as a result of the country'snegotiations with Russia. Although trading in the first quarter was in line withexpectations, the consequences of these changes have impacted the wholeUkrainian dairy sector, including Ukrproduct. Exports of hard cheese from Ukraine to Russia have been severely restricted, andas a consequence, Ukrainian hard cheese manufacturers have both reduced pricesand released excess products on to the Ukrainian market. Some of this excesssupply has been converted into processed cheese thereby affecting pricing withinthis market. In addition, during the first five months of 2006, the Ukrainian economy hasexperienced substantial cost inflation in a number of areas in particular theprices of gas and electricity. In turn, this has led to some major increases inthe costs of freight services, utilities and rents. Given the tradingenvironment detailed above, Ukrproduct has had to absorb the majority of theseincreased costs. As a consequence of these difficult trading conditions during the first half ofthe year, the Company expects to report substantially lower pre-tax profits forthe first six months of 2006, compared to the same period last year. The companyalso expects pre-tax profits for the full year 2006 to be lower than in 2005. On a positive note, the Company's volumes and margins of packaged butter as wellas the production of skimmed milk powder and export sales are in line withexpectations. In addition, the directors believe that there are early signs of areduction in the excess stocks of hard cheese. The directors continue to believe in the strength of Ukrproduct's position inits domestic market and its brands. The Company will continue to invest in itscore brands whilst exploring future opportunities within the Ukrainian dairysector. Accordingly, the directors believe that the Company will emergesuccessfully from the current challenging circumstances. For further information: Ukrproduct Group +38 044 502 8014Iryna Yevets, CEO, and Dmitry Dragun, CFO Financial Dynamics +44 20 7831 3113Ben Foster/ Charles Watenphul This information is provided by RNS The company news service from the London Stock Exchange