Reported net profit: SAR30.1mn, -34% Y-o-Y, -19% Q-o-Q, -25% vs. EFGe Gross profit: SAR234.7mn, -3% Y-o-Y, -17% Q-o-Q, -10% vs. EFGe Net operating profit: SAR51.8mn, -8% Y-o-Y, -4% Q-o-Q, -9% vs. EFGe   Nadec reported disappointing 3Q16 headline numbers, with earnings falling 34% Y-o-Y (-25% vs. EFGe, -19% sequentially on seasonality) on a combination of weak revenue, lower margins Y-o-Y and higher net interest costs (due to rising rates) and other expenses (booked below EBIT). Revenue was flattish for the third quarter in a row (+1% Y-o-Y) and missed our estimate by 8% as dairy and food revenue was flat (+1%; 85%+ of total revenue) likely affected by competitive pressures, slowing demand and lower third-party raw milk sales, as well as the movement of more Ramadan days to 2Q16. Agriculture revenue rose 5% Y-o-Y. Gross margin fell c1.6pp Y-o-Y, with gross profit down 3% (-10% vs. EFGe), mainly on higher utility and transport costs that offset the impact of lower raw material prices. The total cost impact of higher fuel and energy costs was SAR49mn in 9M16 and SAR24mn in 3Q16 alone (full-year estimate provided at the start of the year was cSAR70mn). SG&A costs surprised positively and were flattish (-1% Y-o-Y; -10% vs. EFGe) leading to a tamer EBIT margin drop (-c90bps Y-o-Y). EBIT was down 8% Y-o-Y (-9% vs. EFGe).   We reiterate our Neutral rating on Nadec, as we expect plans to gradually phase out green fodder cultivation in KSA (still most of its needs are sourced locally), as well as lower energy subsidies to pressure margins in the absence of product price increases, and given the slowing top-line momentum. (Earnings release, Hatem Alaa, Nada S. Amin)   NADEC: SAR20.96 as of 12 October 2016, Rating: Neutral, FV: SAR22.50 per share, MCap: USD473mn, NADEC AB / 6010.SE