Wellington, Sept 24 NZPA - Fisher & Paykel Appliances says it may have to write down assets and is now in talks with lenders over its loan covenants.

The company last month told investors it was on track for its forecast profit, but today said normalised net profit for the year to March 2010 would be as much as 40 percent below its earlier estimate.

It blamed a weak and competitive United States market.

F&P Appliances forecast in May that it would have a net profit of $32.8 million for the 2010 financial year, but now expected profit to be $20m-$23m.

The company also said it expected to post a net loss of between $2m and $5m this fiscal year, compared with a May forecast of a net profit of $11.7m.

Reuters newsagency reported F&P Appliances has been cutting its debts this year, bringing in Chinese white-goods maker Haier as a 20 percent shareholder and raising money through a rights issue.

But the company is now looking to review the carrying value of assets, with a view to possible writedowns, and said that its weaker first-half performance was likely to fall outside an "adverse variance" allowed by its loan covenant.

Its banks were supportive, given the steady reduction in its debts, and they were looking to waive compliance for the first half, provided the company's new budget forecasts met the variance test in December and March, the company said.

The announcement was made after the market closed, with the shares down 1.3 percent at 74c.

The share price, which climbed 60 percent after the whitegoods maker brought in Haier as a strategic investor in May, is down 22 percent for the year to date.

F&P said in a statement its North American sales in US dollar terms were now forecast to end the year about 12 percent below the level assumed in May.

"Directors are reviewing the carrying value of assets for any possible impairment."

The company's former chief executive John Bongard is battling prostate cancer and due to retire on Monday.

Stuart Broadhurst, former chief operating officer appliances, will be acting chief executive, as well as retaining his current role, while the company recruits a new chief executive.

F&P recently announced the sale and lease back of the East Tamaki site, covering 14.4 hectares and over 62,000 square metre of offices and factory buildings, that hold its head office.

Its Dunedin, Brisbane and California factories have been moved to cheaper, more convenient locations in Mexico, Thailand and Italy.

And it has sold its 16.45ha Mosgiel site on the outskirts of Dunedin to Fonterra.

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