Arabian Cement Company (ACC) released its preliminary 4Q15 consolidated figures, with recurring earnings -45% Y-o-Y (excluding FX, provisions, deferred tax and one-off impairments) at EGP58 million, 21% below our estimate. The drop in recurring earnings was entirely due to drop in revenue on lower selling prices and volumes decline Y-o-Y. Reported net profit fell 83% to EGP74 million (-58% vs our estimate). Revenue fell 25% Y-o-Y in 4Q2015 to EGP538 million, broadly in line with our estimate (+4%). The revenue drop was driven by i) lower selling prices that declined 15% Y-o-Y, broadly in line with our estimate(+4%) to EGP510 per tonne, in 4Q2014 selling prices were high given the higher cost of production due to lower clinker utilisation rate and use of imported clinker as well as lower cement supply in the market due to fuel shortage; and ii) 12% sales volumes decrease Y-o-Y to 1.056 million tonnes (in line). Revenue weakness, as well as increase in SG&A expenses by 9% led to 33% Y-o-Y decline in EBITDA to EGP141 million (-16% versus our estimate) and EBITDA margin contracted by 3.3pp Y-o-Y to 26.3%, -6pp versus our estimate.   Proposed DPS of EGP0.53 for FY2015: The company BoD is proposing a total cash dividends of EGP200.7 million implying DPS of EGP0.53, 72% payout and 7% yield (versus our estimate of EGP0.60 per share).   Our view: on a recurring basis, the miss versus our estimate was entirely due to higher than expected SG&A expenses, likely related to adjustments and lower economies of scale in 4Q; the miss versus our forecast on a reporting basis was mainly due to provisions, one-off impairment in Goodwill of EGP8.3 million related to ARCC subsidiary Andalus Ready Mix Concrete (99.96%-owned by ARCC) and EGP5.6 million impairment in debtors. We will revisit our forecasts to reflect the impact of the recent EGP devaluation. We expect a hit on 2016 earnings from FX loss on USD debt (cUSD64 million). Operationally, the increase in fuel bill will likely be mitigated by cement price increase, in our view, as ACC rise in cost, due to its shift to coal/RDF, will be lower than average industry: i) ACC pays USD4.5/mmBtu for coal (devaluation adds cEGP20 to cost/tonne), while cement players who did not shift to coal pay USD8/mmBtu (cost addition of cEGP35-45/tonne); and ii) ACC is more efficient as it uses c3.5mmBtu/tonne versus 4-5 for less efficient peers. (Tarek El-Shawarby, Company)   Arabian Cement (Egypt): EGP7.82 as of 24 March 2016, Rating: Buy, FV: EGP17.25 per share, MCap: USD334 million, ARCC EY / ARCC.CA