Headline net loss: SAR964mn vs. net profit of SAR515mn in 4Q15, SAR173mn in 3Q16, EFGe: SAR17mn Revenue: SAR6.25bn, 0% Y-o-Y, +7% Q-o-Q, 0% vs. EFGe Gross profit: SAR755.1mn, -41% Y-o-Y, -35% Q-o-Q, -41% vs. EFGe Operating loss (including associate income): SAR176mn vs. operating profit of SAR378mn in 4Q15, SAR313 in 3Q16, EFGe: SAR267   Savola Group reported significant losses of SAR964mn in 4Q16 as weak performances at consolidated food and retail businesses continued and the company booked a number of potentially non-recurring items: impairment of assets and goodwill related to the Egyptian operations (SAR245mn net of minority interest); inventory reduction at Panda via aggressive discounts mainly on slow-moving items like electronics (SAR343mn); investment impairments (cSAR272mn) partly as 49%-owned Intaj capital was moved to AFS investments (from associate previously) and likely revalued; large FX losses as well as greater losses at United Sugar Co. Egypt (classified as a discontinued operation until EBRD transaction that will dilute Savola’s stake to c33% concludes in 1Q17) as FC liabilities at Egyptian subsidiaries were repriced post EGP floatation; the exact magnitude of FX losses was not disclosed but the company estimated it at SAR171mn based on EGP/USD of 13 (we believe FX losses could be in the range of SAR230-250mn based on the year-end EGP/USD of c18); and one-off gains (cSAR26mn) from the reclassification of the Moroccan edible oils subsidiary from discontinued operations. Adjusting for these one-offs without the FX loss whose magnitude wasn’t disclosed, net losses would have come in at SAR130mn. It is worth noting that 4Q15 included one-off gains namely SAR126.5mn in insurance claim settlement and SAR38.8mn in capital gains from land sale (recurring earnings of SAR350mn). Revenue was flattish and in line with our estimate, while the gross margin fell c8pp Y-o-Y with gross profit dropping 41% Y-o-Y (-41% vs. EFGe) mainly on weak margins at grocery retailer Panda (partly due to the abovementioned inventory reduction).   The company booked an operating loss of SAR176mn (vs. a positive EBIT of SAR378mn in 4Q16 and our estimate of SAR267mn) despite a slight decline in SG&A costs (on lower selling & distribution expenses) due to the weak gross profit and lower associate and dividend income Y-o-Y (likely driven by real estate associate Kinan as Almarai & Herfy reported flattish and higher 4Q16 earnings, respectively).   The company announced that it will not distribute dividends this quarter and for the rest of 2017.   We were expecting a negative surprise for Savola given a weaker EGP and aggressive promotions at Panda in the quarter; however, the magnitude of the losses was large and we expect the stock price to react negatively to the results this week. We hope that these year-end adjustments mean that the company starts 2017e with a clean slate and we start seeing improvements at grocery retailer Panda that has been increasingly loss making throughout 2016. We have a Neutral rating on the stock. (Company disclosure, Hatem Alaa, CFA, Nada S. Amin) Savola: SAR35.80 as of 19 Jan, Rating: Neutral, TP: SAR38.00/share, MCap: USD5,098mn, SAVOLA AB / 2050.SE