Net loss – -EGP39mn, N/M Y-o-Y, +EGP2mn Q-o-Q, -EGP6mn vs. EFGe Gross profit – EGP67mn, -36% Y-o-Y, +26% Q-o-Q, +18% vs. EFGe Net operating loss – -EGP12mn, N/M Y-o-Y, -EGP1mn Q-o-Q, -EGP5mn vs. EFGe   Lecico reported net loss of EGP39mn in 2Q16 vs. net profit of EGP4mn in 2Q15, which is broadly in line with our net loss forecast of EGP35mn. The loss was driven mainly by shrinking margins on higher cost of sales/unit on continued reduction in production, as well as decrease in revenue. Revenue came in at EGP347mn, showing 12% Y-o-Y decline (+9% Q-o-Q, in line with our forecast). The Y-o-Y drop in revenue was driven entirely by 27% Y-o-Y decrease in tiles revenue on contraction in volumes (-20%, -45% in export on political tension in main markets, -20% domestic on continued demand pressure) and selling prices (-4%) reflecting price reductions during 2015 and promotions in 1H16. Sanitary ware revenue, on the other hand, inched up 2% Y-o-Y, due mainly to a 13% increase in average selling prices on price increase during April and May offsetting 10% drop in volumes (-6% export, -16% domestic).   Gross profit fell 36% Y-o-Y (+18% vs. our estimate), and margins contracted 7pp, and EBITDA was further down 71% Y-o-Y to EGP16mn (+27% vs. our estimate), and EBITDA margin shrank 9pp to 4.5% vs. 13.6% and 2.5% in 1Q16 (+100bps vs. our forecast). The company showed a net operating loss of EGP12mn vs. net operating profit of EGP28mn in 2Q15 and a net operating loss of EGP11mn in 1Q16. (Earnings release, Tarek El Shawarby)   Lecico Egypt: EGP2.70 as of 15 August 2016, Rating: Neutral, FV: EGP5.00 per share, MCap: USD24mn, LCSW EY / LCSW.CA