* Q4 net profit 488.5 mln riyals vs 483.7 mln riyals
* Sales increase 0.7 pct on a year earlier
* Cost controls, efficiency gains to remain a priority (Adds details on cost control measures)
DUBAI, Jan 15 (Reuters) - Saudi Arabia's Almarai, the Gulf's largest dairy company, reported a 1 percent increase in fourth-quarter net profit on Sunday, broadly in line with analysts' forecasts, and said cost controls would continue to be a priority.
Almarai said net profit totalled 488.5 million riyals ($130 million) in the three months to Dec. 31, up from 483.7 million riyals in the year-earlier period.
Six analysts polled by Reuters had forecast on average that Almarai would make a quarterly net profit of 519 million riyals.
Almarai said earnings were hit by a 12.4 million riyals impairment of assets, changes in foreign exchange rates and higher funding costs during the quarter.
Improving efficiency and cost control measures would remain a priority "given the changing economic environment and the increasing competitive conditions," Almarai said.
It reported quarterly sales of 3.61 billion riyals in the fourth quarter, up 0.7 percent from a year earlier.
Saudi retailers had to contend last year with government austerity measures imposed to curb a state budget deficit, including utility price increases and reduced financial allowances for public sector employees.
Almarai said on Dec. 6 that its board had recommended a cash dividend of 0.9 riyal per share for 2016, lower than the cash dividend of 1.15 riyals for 2015.
$1 = 3.7498 riyals Reporting by Alexander Cornwell; Editing by Tom Arnold and Susan Fenton