"The first quarter result, combined with a weak retail outlook in Australia and forecast transactional hedging losses, are likely to result in the Appliances' businesses first half operating earnings before interest and tax being at or slightly above breakeven," said Turner.
"The board reiterates that forecasting the F&P Appliances business in the current environment remains extremely difficult."
Turner said in the first quarter of the current financial year, "the benefits of a rapidly appreciating Australian dollar against the US dollar were favourable to input costs.
However, these benefits were more than offset by the company's hedging losses.
"This represents a one-off loss of earnings in the first quarter. Because of the length of some of the hedging contracts, we will continue to incur losses, albeit at a reducing rate, for some months to come should the AUD/USD remain at around US$1.05.
"The company's transactional hedging policy was substantially lengthened following the refinancing in May 2009 and now that debt levels have reduced, the company is progressively reverting to the previous transactional hedging policy which will be more responsive to currency movements."
The Aussie dollar reached parity with the greenback 10 months ago, and has been wedged around US$1.05 in recent times.
On top of that, weak consumer demand in Australia, combined with "very difficult global conditions will persist" meant there would be "no sudden recovery in consumer demand in the short term," said Turner.
"These are the market conditions we have to adapt to."
While the second half was traditionally the stronger earning, "volatile economic conditions in our key markets, in particular Australia, and potential for further increases in raw material prices" were causing concern.
"If these concerns were realised over the remainder of the financial year, and current exchange rates persisted, the Board's view is that full year forecast operating earnings before interest and tax for the appliances part of the business will be between $10 million and $20 million," said Turner.
However, the company's finance unit, one of the few to survive the finance company clean-out, performed well, despite soft demand, and the move away from exclusive retail distribution had seen the company's brands take back market share to better levels seen in March 2010.
There were also still major productivity gains to be wrung out of the company's investment in new manufacturing plant in Mexico and Thailand.
"Some of the company's manufacturing locations are not yet optimised.
"Completion of the global manufacturing strategy will deliver further productivity gains," Turner said.
"There are still considerable refinements required. Our strategic review in this area is ongoing."
At the same time, rising input prices were prompting price rises by competitors, which could allow F&P Appliances to restore its own margins.
Turner also pointed to the pending commercial release of an energy-efficient refrigerator technology, 15 years in development, with strong global interest likely in fridges that use around a third less energy than today's units.
However, the concerns that had prompted suspension of dividends had "not abated at this time and the financial market volatility over the past month shows this decision to be prudent," he said.
This story has been updated from the original following a request from F&P Appliances making a distinction between the "appliances" segment of its business, and the business as a whole.
