RAKVERE LIHAKOMBINAAT

COMMENTARY TO FINANCIAL RESULTS



COMMENTARY TO CONSOLIDATED FINANCIAL RESULTS, 6M 2001



Rakvere Lihakombinaat group consists of the following companies

(holding %)-  AS Rakvere Lihakombinaat- parent, AS Rigas Miesnieks 

(92.47%), AS Ekseko (97.70%), AS Linnulihatooted (76%), Rakveres 

Mesos Produktai Vilnius (100%). As at 30.06.2001 the number of 

employees of Rakvere Lihakombinaat group was 1,191 

(1,215 employees as at 30.06.2000).



H1 2001 has been successful for Rakvere Lihakombinaat. Increase

in consumption of meat products in all the markets while the prices 

of meat products have risen significantly, has been influenced 

by the positive economic development in the Baltic region.

Export to Ukraine has risen due to the strength of the dollar.

6m group turnover amounted to EEK 493.5 million (EEK 407.8 million, 

respectively), 21% more that last year. Sales in the Baltic states

and Ukraine amounted to 14.5 thousand tons, 0.6 thousand tons or

4.3% more than last year.



Specializing within the group, utilizing synergy, and investments 

to production have increased the overall efficiency. The latter 

along with increase in turnover has improved the company's 

profitability. Rakvere Lihakombinaat group H1 net profit totaled 

EEK 37.0 million (EEK -5.3 million in H1 2000). 

  

The price level of raw materials in Europe, and especially in the 

Baltic states is exceptionally high due to the raging diseases in Europe

last year, which has influenced the consumers' higher consciousness

and increase in demand for domestic meat. Currently, the price

level paid to the pork producers in the Baltic states is one of the

highest in Europe. In this situation Ekseko, the largest 

pig raising company the Baltic states, has a very positive role

in the group. The company's output capacity and efficiency

have risen significantly due to major investments, i.e. the cost per 

kilo of pork has decreased over EEK 2.00 per kilo during the year. 

Pig raising on a contractual basis or "the pig project" will give an 

opportunity to increase production even further by including 

Estonian farmers.



Rakvere Lihakombinaat financial ratios (in EEK million):



		 	 6m 2001       6m 2000 	  12m 2000

Net sales		   493.5	 407.8	     891.6

Expenses		   451.2         410.2	     886.6

Operating profit	    42.3          -2.4	       5.0

Net profit		    37.0          -5.3	       1.2

Investments		    23.4          31.4	      49.7



The company's economic activities in Q3 will continue as planned.

The management expects continual positive development regardless

of certain macro-economic threats in the Baltic states.





Olle Horm

Management Board chairman

+372 32 29 221