Australian grocery distributor Metcash has reduced its 2011 full-year earnings guidance on the back of difficult trading conditions.

The company today (2 March) cut its earnings growth to between 3% to 5%, down on the previously forecast 6% to 8%.

The reduced forecast was based on continuing food and liquor price deflation, value-driven consumer behaviour, escalating utility costs, unseasonal weather and high interest rates. Metcash added that the natural disasters in Queensland and Victoria have impacted operations, but the “full financial impact is yet to be determined”.

The group said that its market share “remains stable” at 16.9%, “validating the competitive initiatives undertaken during the year to maintain Metcash and its customers as the third force in the grocery landscape”.

The group said that it was “concerned” about its ability to achieve its forecast when it announced its first-half results in November due to the “extremely tight trading conditions”.