2016 will be a challenging year given expected cost pressures from subsidy and fuel changes but it should be able to mitigate this to some extent mainly through improved efficiency in production and distribution, and also some price increases for non-regulated items i.e. juice and bakery could help. -  Results from the consultative committee for the implementation of the phasing out of green fodder have yet to be reported but companies are still pushing for fresh dairy price increases (government set, unchanged since 2008). The first wave of price increase or adjustment towards GCC prices, would cover the cost hike and could provide significant upside to our forecast of flattish 2016 earnings. -  Market growth for fresh milk is waning to c6% from c9-10% average on austerity measures. The impact is palpable on the poultry side where some consumers are shifting to cheaper frozen chicken (that Almarai doesn’t sell). This is having an effect on the company’s ability to ramp up volumes in the poultry division; accordingly, management is considering raising its B2B exposure and may sacrifice margins in the short-term. -  The government has delayed making physical payments for animal feed subsidies, which the company recognises on a cash basis based on their pace of consumption (have some buffer on its balance sheet). -  Bakery division performance remained solid in 1Q16 and should remain so for the next 6-7 quarters; the new plant will be launched in 2Q16 and will allow for the introduction of some value-added products. (Almarai, Nada Amin, Hatem Alaa)