Net income – SAR56mn, -41% Y-o-Y, -52% Q-o-Q, -39% vs. EFGe Gross profit – SAR99mn, -41% Y-o-Y, -12% Q-o-Q, +2% vs. EFGe Net operating profit – SAR86mn, -43% Y-o-Y, -11% Q-o-Q, +6% vs. EFGe   Yamama Cement Company reported its preliminary 3Q16 headline figures. Reported earnings fell a sharp 41% Y-o-Y to SAR56mn, which was attributable to: i) drop in revenue on lower sales volumes and selling prices; ii) higher cost of sales on hike in energy cost; iii) higher depreciation due to amending the useful life of the company’s fixed assets, as a result of the company’s moving to the new plant; and iv) drop in unrealised gains for the company’s investment portfolio. Revenue was down 16% Y-o-Y to SAR236mn in 3Q16 (in line) that is attributable to 12% Y-o-Y drop in sales volumes (-4% vs. our estimate) and 5% drop in selling prices (+3% vs. our estimate). The Y-o-Y  drop in volumes is driven by weak local demand. Gross and net operating profit dropped 41% and 43% Y-o-Y, respectively, driven by lower revenue and shrinking margins. Gross and EBIT margins dropped 17 pp Y-o-Y on hike in energy cost (in line).   On a different note, the company’s BoD has decided not to distribute dividends in 3Q16, as the company has started the implementation of the new plant project that requires funding. The company has distributed SAR0.75 DPS for 1H16 (average payout of 47% for 9M16); hence, we expect our DPS forecast of SAR2.25 for FY2016 (76% payout) to come under pressure. (Earnings release, Tarek El-Shawarby)   Yamama Cement: SAR17.03 as of 17 October 2016, Rating: Buy, FV: SAR40.60 per share, MCap: USD920mn, YACCO AB / 3020.SE