Manufacturer Fisher & Paykel Appliances has warned its full year profit could fall as much as 40%.
In an announcement to Australia's stock market on Thursday evening, after New Zealand's market had closed, Fisher & Paykel said the profit warning was due to intense competition and weaker sales of high end appliances in the US.
The company is anticipating a profit of about $20 million to $23 million for the year to March, compared to a forecast of $32.8 million it made in May.
Fisher & Paykel revealed it is in talks with its banks over breaching part of its loan covenants after a poor first half trading performance and said it may have to write down assets.
The company is confident the banks will accept the revision of terms and new earnings forecast, as it is on track to reduce debt to below $200 million by the end of March.
It expects sales in New Zealand and Australia to exceed earlier projections despite difficult trading conditions and predicts significant cost savings from moving production to Thailand and Mexico.
Fisher & Paykel Appliances raised over $200 million from investors to reduce debt earlier this year, and Chinese electronic and appliance maker Haier took a 20% stake in the company.
Shares in the company were down 8 cents to 66 at 12.25pm on Friday.
