Saudi Marketing Company (Farm Superstores) [4006.SE] reported 4Q2015 KPIs, with earnings dropping 16 % Y-o-Y to SAR19.4 million (-33% Q-o-Q-Y), mainly on a 21% increase in SG&A expenses that offset only 5% growth in top-line. The company attributed the decline in net income to: i) additional expenses related to store openings, as the company opened one new store during the quarter, bringing the total number of supermarkets in 4Q2014 to 57 (versus 50 in 4Q2014) and one new Adventure World location (total of nine in 4Q2015 versus eight in 4Q2014); ii) higher staff and energy costs; and iii) the write-down of an end-of service benefit provision that was accounted for previously in SG&A (booked in non-operational revenue; iv) a decline in high-margin wholesale household products revenues by 41%; v) expanding losses in the Lebanon branch by nearly fivefold to SAR1.3 million from SAR0.3 million mainly on a drop in revenues to SAR3.6 million from SAR5 million; and vi) non-recurring losses of SAR0.7 million. Meanwhile, gross profits grew 12% Y-o-Y on the back of escalated revenue from rental income (gondolas) and for higher supplier rebates, gross margin accordingly widened 130bps to 24.1%. Meanwhile, operating profit declined 16% Y-o-Y on the aforementioned SG&A cost surge to SAR23.5 million; EBIT margin narrowed 130bps Y-o-Y to c5.0%. (Company disclosure)