German retail giant Metro Group has warned its earnings this year will be dampened by a “difficult” economy, price cuts and investment in future expansion.

The world’s third-largest retailer reported net profit attributable to shareholders of EUR631m (US$832m) for 2011, down from EUR850m a year earlier. Metro blamed worsening global macroeconomic conditions for the drop. 

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EBIT in the 12-month period to the end of December, slid 4.5% to EUR2.21bn. EBIT before special items dropped 1.8% to EUR2.37bn.

Metro said EBIT before special items is expected to “roughly” match the 2011 result. Price “investments” and plans to “lay a foundation” from which it will “accelerate” expansion will weigh on earnings, the retailer said.

Sales are expected to increase but Metro said the “persistently difficult economic situation” and slowing inflation will have a negative impact on growth.

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“Like sales, we expect earnings to pick up in 2013,” Metro said.

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In 2011, sales fell 0.8% to EUR66.7bn, hurt by exchange rates and “disappointing” Christmas trading, Metro said.

In Germany, sales were affected by store disposals within its Metro Cash & Carry and Real divsions and resulted in a decline of 1% to EUR25.9bn. International sales dropped 0.7% to EUR40.8bn.

Metro Cash & Carry sales rose by 0.2% to EUR31.2bn, while sales of Real decreased 2.3% to EUR11.2bn due to store disposals.

“The macroeconomic conditions in many countries have worsened noticeably compared to 2010. This notwithstanding, we succeeded in maintaining group sales and EBIT before special items almost at the same levels as last year”, said Metro chairman of the board Olaf Koch.

In addition, the group said it will change its financial year, which is presently equivalent to the calendar year. From 2013, Metro’s financial year will run from 1 October to 30 September.