Metcash plunges on profit downgrade Smaller supermarkets have been hurt by the price war between Coles and Woolworths and weak consumer confidence. Shares in grocery wholesaler Metcash have plunged this afternoon after the company unveiled a profit downgrade at its annual meeting today. Metcash warned that its earnings per share will fall by as much as 9 per cent this fiscal year. The large downgrade took analysts by surprise and saw them rewriting their forecasts for the wholesaler. Analysts were originally tipping EPS growth of around 2 per cent for the year. ""Management's expectations are for these challenging conditions to remain in place for the remainder of the year,"" said the company, which provides groceries, liquor, hardware and automotive parts to the independent supermarket and retail sector. Shares in Metcash fell nearly 6 per cent on the earnings warning, touching a low of $3.24 this afternoon, and are currently trading at $3.27 - down 18 cents or 5.2 per cent. For 2012-13 the company's underlying net profit rose 6.9 per cent to $281 million. The company's grocery arm, which is in a cut-throat battle with supermarket giants Woolworths and Coles, has suffered recently from market share loss to its bigger grocery rivals and investment in its marketing and promotions to attract price-conscious shoppers. Last financial year Metcash's food and grocery division saw pre tax earnings slide 5 per cent to $377.9 million with its margins sliding to 4.14 per cent from 4.26 per cent. The company also blamed deregulated trading hours in WA and Queensland as well as store closures for its weaker earnings performance. New Metcash boss Ian Morrice also blamed a lower than expected return on investment for its Franklins acquisition for two ""lost years"" while it was fighting the ACCC to approve its purchase of the business. Mr Morrice, who fronted his first AGM as the new boss of Metcash, said a strategic review of the entire Metcash business was continuing with an update to be delivered to investors in December. But he warned that general trading conditions remained tough and were unlikely to recover until there were stable macro-conditions, especially around the election, movements in the Australian dollar and house prices. Consumers remained cost conscious, meaning high promotional activity at the supermarkets was set to continue which would also drive price deflation.