Juhayna posted 3Q16 results, with a net income of EGP58.2mn, falling 34% Y-o-Y (+95% Q-o-Q, -8% vs. EFGe), as FX-driven margin pressure continued for the second consecutive quarter. Recurring net income (ex. FX gains, capital gains/losses and provisions), dropped a sharper 47% Y-o-Y and was 14% lower than our forecast on lower than-expected revenue and higher interest expense. Revenue growth softened to 11% Y-o-Y, missing our forecast by 9%, after trending at 20%+ growth for the last few quarters. Slower growth was attributable to inflationary pressures and decreased consumer purchasing power, according to the company’s release. Dairy (51% of revenue) and juice (23%) propelled top-line growth, growing 10% and 22%, respectively. Yogurt revenue (22%) fell 5% Y-o-Y, likely on less Ramadan days in the quarter (peak for yogurt consumption). Margins fell across the board due to the impact of EGP weakening (shift of sourcing entirely to the black market) and lack of availability of foreign currency. Gross margin and EBITDA margin both narrowed c6pp Y-o-Y to c35% and c16%, respectively. Accordingly, gross profit and EBITDA fell 6% and 21%. The miss vs. our forecast would have been more severe had it not been for relatively tame SG&A cost growth (+14% Y-o-Y). The company reiterated its price uptick strategy to pass on higher production costs, while increasingly relying on local raw materials that should help improve margins going forward.   The results set is reflective of a challenging operating environment, given currency shortages and EGP devaluation, coupled with stiffening competition. The company’s pricing strategy should help provide some relief over the coming few quarters, in our view. Also, Juhayna has no plans to cancel ongoing projects, but future investment plans have been halted for the time being. (Earnings release, Hatem Alaa, Nada Amin)   Juhayna: EGP4.10 as of 20 October 2016, Rating: Buy, FV: EGP7.00 per share, MCap: USD435 million, JUFO EY / JUFO.CA