Fisher & Paykel Appliances has taken a predictable hit on the New Zealand share market, with its stock price plummeting by 20% this morning following a dire profit downgrade overnight.

The appliance manufacturer announced on the ASX last night that its forecasted net profit for 2010 would now be about $20-23 million after initially forecasting a full year profit of $32.8 million.

The news had an immediate impact on Fisher & Paykel Appliances' (NZX: FPA) share price. While it closed at 74c yesterday, that fell to 59c when the market opened today.

It fell another one cent before fighting back a little and was down 14.86% to 63 cents at 11.30am.

The company has blamed worse-than-expected sales in the US for most of the downgrade, along with increased manufacturing costs at its new Mexican factory at Reynosa.

The company’s performance in the first six months of its financial year will see Fisher & Paykel breach its 20% permitted adverse variance under its budget performance covenant, with the manufacturer confident that revised forecast and covenant terms will be approved by its banking syndicate.

It has also stressed it is in no danger of breaking any of its other covenants.

Despite the drop in sales and profit, the company is standing behind its earlier forecast that debt will fall below $200 million by the end of March next year.