In June, Fisher and Paykel raised $200 million from investors.
But yesterday's sell down wiped, by the end of trading, $66 million from the company's market capitalisation.
Now Fisher and Paykel may have to go back to investors for more cash, or Chinese shareholder Haier may want to increase its stake from 20%.
When the stock exchange opened, Fisher and Paykel's 74c shares plunged immediately by 21% to 59c.
By the end of the day they had retraced some losses to close at 65, with 36.2 million shares sold.
In a trading update released first to the Australian Securities Exchange on Thursday, Fisher and Paykel announced that because of increasing competition, depressed United States markets and extra set-up costs in Mexico, its forecast after-tax profit of $32.8 million could be down 30%-40% to $20 million-$23 million.
Acting chief executive Stuart Broadhurst said while poorer trading would break a "budget performance covenant" with banks, he was confident talks with the banking syndicate on a revised forecast would, with a banking update scheduled for next week, be approved.
Craigs Investment Partners broker Peter McIntyre said the announcement was a shock to the markets yesterday.
"The share price [decline] reflects just how much of a surprise this is to the market, considering they have been giving updates and took $200 million [recapitalisation] from the market in June," he said.
Earlier in the year, Fisher and Paykel had its banking agreements rolled over, owing the syndicate $80 million, as it sought to shore up its finances and deal with mounting debt.
In late May it announced a $200 million recapitalisation, including an $80 million stake taken by mass whiteware manufacturer Haier.
"We will not be surprised if there is more deterioration in the US and Euro markets, that Fisher and Paykel will require a further capital injection and go back to shareholders.
Forsyth Barr broker Tony Conroy said the announcement was disappointing, coming just four months after the $200 million rights issue.
He did not believe breaking the banking covenant was significant, as debt levels were lower and one facility was to be paid six months ahead of schedule.
"The initial market reaction may be an over-reaction, but investors will not be impressed with the company's ability to forecast, having downgraded so soon after the previous announcement," he said.
On a positive front, Europe and Australia are in line and New Zealand slightly ahead of expectations, and finance business also exceeded expectations.
However, that meant overall the business had performed worse than initial impressions.
"We will be downgrading the valuation, but not greatly," Mr Conroy said.
Debt levels, which were exaggerated by mounting restructuring costs, were a concern for analysts earlier in the year.
However, Mr Broadhurst said, debt levels were still forecast to fall below $200 million by March next year.
From a New Zealand $53 million land sale, $34 million would complete full repayment of a $235 million debt facility six months before schedule, and the $19 million balance would be used to reduce Fisher and Paykel's term loan facility.
Bank-provided funding facilities of $125 million were recently extended for a further 12 months, Mr Broadhurst said.
Fisher and Paykel has been hard hit during the past two years with the volatility of the New Zealand dollar, record global metal prices, escalating Asian competition and increasing costs in New Zealand.
The company subsequently laid off more than 1000 staff during the past 18 months in New Zealand, Australia and the United States, including cutting 430 jobs with the closure of the 23-year-old plant in Mosgiel, near Dunedin, as it moved manufacturing to low-wage economies, including Thailand and Mexico.
Mr McIntyre said US sales volumes had "savaged revenue", but so had the cost structure of the new plant in Mexico, with total one-off costs mounting to between $3.9 million to $5.9 million.
Mr Broadhurst said manufacturing costs at the new Mexican factory were higher than expected.
"Lower production volumes, which are reflective of lower sales, have adversely affected the recovery of manufacturing overheads and the outsourcing of injection moulding and press metal processing has initially been more expensive than assumed," he said in a statement.
Increasing costs were also noted in several areas, including forecast relocation costs to Thailand and Mexico up $1.8 million, debt restructuring costs up $1.5 million and an additional $3.8 million required for redundancies.
