RAKVERE LIHAKOMBINAAT

COMMENTARY TO FINANCIAL RESULTS



ACTIVITIES REPORT OF THE BOARD ON 1999



RAKVERE MEAT PROCESSING COMPANY LTD

GENERAL DATA



Share capital as at 31.12.1999 was EEK 377 217 000.- (three hundred seventy

seven million two hundred and seventeen thousand Estonian krons)

Number of employees as at 31.12.1999 was 613.



SUBSIDIARIES

Rigas Miesnieks Ltd, shareholding 87.95%

Ekseko Ltd, shareholding 97.3%

Poultry Products Ltd, shareholding 76%

Rigas Miesnieks Trading Ltd, shareholding 100%

Rakvere Mesos Produktai Vilnius Ltd, shareholding 100%



SHAREHOLDERS (as at 31.12.1999)

Shareholders holding more than 2% of shares

Shareholder			number of shares	% of shares



HK Ruokatalo Oyj		    30 148 402		   79.9232



Council and board members holding the shares of Rakvere MPC

Shareholder			number of shares	% of shares



Uno Vallner			         1 000		    0.0026





MANAGEMENT



COUNCIL 

Simo Palokangas, chairman of the council

Jukka Ahonen, member of the council

Matti Perkonoja, member of the council

Tiit Kõuhkna, member of the council

Toomas Kõuhkna, member of the council



BOARD



Peeter Maspanov, chairman of the board

Ilkka Häyhä, member of the board

Uno Vallner, member of the board

Teet Soorm, member of the board



MANAGEMENT



Ilkka Häyhä, development director

Uno Vallner, production and technical director

Teet Soorm, financial director

Andrus Sonts, business director

Janek Oblikas, sales and marketing director





FINANCIAL RESULTS IN 1999



UNCONSOLIDATED



The financial year 1999 was complicated, yet interesting for Rakvere Meat 

Processing Company Ltd. 

The net turnover of the company was EEK 539.6 million. In comparison with 1998 

the turnover decreased by EEK 186.8 million or 26%. Despite the decline in 

turnover RPMC earned a profit of EEK 32.3 million which proves the efficiency 

of both production and management as well as high cost efficiency.

The decline in turnover in 1999 was caused by slightly decreased sales volume 

in the domestic market and major decline in export volumes.



CONSOLIDATED



In 1999 the net turnover of the group was EEK 737.7 million (compared with 1998

the group turnover decreased by EEK 182.8 million or 20%) and the net profit 

of the group was EEK 21.1 million. Major decline in the turnover of the RMPC 

Group was mainly caused by the economic and financial crisis in Russia which 

started in the summer 1998 and lasted throughout 1999. The crisis affected 

greatly the Ukraine, RMPC's major export partner. The company's sales volumes 

decreased considerably when compared to 1998. Rigas Miesnieks, the largest 

subsidiary of RMPC also lost its possibilities to export to Russia.



Profit of parent company			EEK 32.3 million

Loss of Ekseko				        EEK  3.4 million

Loss of Rigas Miesnieks Trading		        EEK  1.6 million

Loss of Rigas Miesnieks			        EEK  4.7 million

Profit of Poultry Products			EEK  0.1 million

Profit of Rakveres Mesos Produktai Vilnius	EEK  0.2 million

Group profit (consolidated)			EEK 21.1 million



INVESTMENTS



INVESTMENTS IN FIXED ASSETS



In 1999 EEK 23.2 million were invested in fixed assets. The main part 

(EEK 13.4 million) of investments was made in updating and developing logistics

and improving the company's sales system. EEK 6.0 million were invested in 

production equipment and technology. Investments of EEK 3.8 million were made 

in improving the information system. 



PRODUCTION AND PRODUCT DEVELOPMENT



The largest product group of Rakvere Meat Processing Company is frankfurters 

and cooked sausages.

In 1999 the development of this very product group was in special focus. 

The cheese frankfurter "Ekstra" was launched and the production of the lower 

price "Valla" frankfurter restarted. In 1999 Rakvere Meat Processing Company 

also widened considerably the range of pork products. In cooperation with 

AS Kaupmees a fresh meat processing and sales centre was launched in Tallinn 

in 1999. The establishment of the new meat sales centre has added ca 30 new 

products in the fresh meat list of the company. Much attention was also given 

to the development of HoReCa as a growing sector.



In order to keep pace with the times and take into account consumers' changing 

eating habits RMPC launched the brand Rakvere Chicken in 1999. Various finished

and semifinished products of broiler meat are produced under the Chicken brand.



In 1999 the product development team was established in RMPC. 25 new finished 

products were brought to market as a result of the team's regular and 

successful work. In addition to developing new products the product development

team worked actively at adjusting and updating the product assortment. As there

are seasonal fluctuations in the consumption of meat products the products were 

also grouped, meaning that products were brought to market in seasonal groups 

(e.g. summer products group in summer, Christmas products group at Christmas).



MARKETING



In 1999 Rakvere Meat Processing Company sold 19 387.9 tonnes of main products. 

The average daily sales volume was 60 tonnes.



The total export amounted to 18.2% of turnover or EEK 99.6 million that is 

EEK 79.0 million less than in 1998. Major export partners of Rakvere Meat 

Processing Company in 1999 were Latvia, the Ukraine and Lithuania.



In money terms the total export volumes were divided as follows: Latvia 47.8%, 

the Ukraine 6.0%, Lithuania 39.3% and Russia 0.7%, other countries 6.2%. The 

export of finished products was divided as follows: the Ukraine 14.4%, 

Latvia 23.6%, Lithuania 61.7%, Russia 0.3%, 



In 1999 Rakvere Meat Processing Company continues to focus on regaining export 

volumes and entering new target markets. In the Estonian market the main stress

is laid on securing the market position primarily by developing product mix, 

improving service and product quality.



In December 1999 the market share of Rakvere Meat Processing Company in meat 

products was 36% according to Emor.





Andrit Heidov

Communication manager

232 29 211