Belgium-based Colruyt has revealed a lower-than-expected annual profits after it came under pressure in the second half of the year due to rising costs.

For the 2010/11 financial year to the end of March, Colruyt’s net profit increased by 2.5% to EUR338m (US$481m), the discount food retailer reported today (28 June). The figure came in below Reuters estimates of EUR352m.

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Operating profit edged up by 0.5% to EUR472.2m, weighed down by higher personnel costs and depreciation charges.

Sales in the period, however increased by 7.8% to EUR7.28bn.

“The gross profit margin came under pressure in the second semester, due to rising cost price inflation that could only partly be passed on to the end consumer,” Colruyt said. “In a climate that has become more challenging, we consistently adhere to our strategy of the lowest prices.”

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Colruyt’s share price dropped by 10.6% to EUR33.60 at 12:47 BST today.

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