* Q3 net profit 654.6 mln riyals vs 595.1 mln
* Boosted by sales growth and drop in cost of sales
* To continue focus on cost controls, efficiency gains (Adds detail, context)
By Tom Arnold
DUBAI, Oct 9 (Reuters) - Saudi Arabia's Almarai, the Gulf's largest dairy company, reported a 10 percent rise in third-quarter net profit on Sunday, broadly meeting analysts' forecasts with the help of cost controls it said would remain a priority.
Saudi retailers will in coming quarters have to weather the impact of austerity measures imposed to curb a huge state budget deficit, including reducing financial allowances for public sector workers.
Almarai - the second Saudi retailer after Jarir Marketing to report third quarter earnings - said the changing economic environment and increasingly competitive conditions meant it would continue to focus on cost controls and preserving cash flow.
Its profit in the three months to Sept. 30 was 654.6 million riyals ($174.6 million), up from 595.1 million riyals in the year-earlier period, according to a bourse statement. That was broadly in line with the average of five analysts' forecasts polled by Reuters of 627.8 million riyals.
Jarir reported third-quarter net profit of 220 million riyals on Thursday, up from 218.5 million riyals a year earlier. Five analysts polled by Reuters had on average forecast 200.6 million.
Almarai said sales rose 2.5 percent, boosted by growth in its main segments of dairy and juice and bakery, while its cost of sales dropped 1.1 percent on lower input costs, better cost management and "enhanced production efficiencies." (Editing by Andrew Torchia and John Stonestreet)