German retail giant Metro Group has blamed its steep drop in profit during 2012 on higher investment levels and challenging operating conditions.
The company said today that net profit fell 26.7% to EUR717m (US$926.2m) in the fiscal. Operating profit was down 16.7% in the period, dropping to EUR1.98bn. Metro said its profits had been dented by the weak macro environment in European markets as well as higher investment in its business development, including expansion of its multichannel capabilities.
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The group emphasised the result was “in line” with its revised guidance and added that it has improved cash flow and significantly reduced debt during the year.
Sales were up 1.2% on the year, climbing to EUR66.7bn. Gains were driven by expansion in emerging markets, with sales in Asia and Africa up 26.2%, while eastern European sales gained 4.8%. In Germany, sales edged up just 0.6%. However, in western Europe, the group reported a 4.3% drop in revenue.
Metro also announced it will change the timing of its financial year, moving the start of the year to 1 October. This will result in the 2013 reporting period being only nine months long. As a consequence of the shorter period, Metro predicted operating profit will decline during the coming fiscal year versus the first nine months of 2012.
Metro shares were down 2.53% at 11am (GMT).
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