Beef grazier Australian Agricultural Company Ltd (AAco) has downgraded its guidance for the second half of the year due to the rising Australian dollar.

AACo also announced on Monday it had appointed former Colly Cotton head David Farley as its chief executive and managing director.

In an announcement to the market early on Monday, AAco said it had reviewed its second half earnings forecast in the light of a strongly appreciating Australian dollar against the US currency.

AACo said it now did not expect any significant earnings before interest and tax (EBIT) contribution in the second half of the financial year, ending on December 31, to the company’s year end results.

The company said major Australian cattle price indices had fallen around nine to 11 per cent.

“Cattle prices are influenced by many factors, but the recent falls are widely attributed to the historic high level of the Australian dollar, which has risen from $0.805 AUD:US as at 30 June 2009 to around $0.915 AUD:US on Friday 30 October 2009,” AAco said in its statement.

“AAco’s reported earnings are extremely sensitive to year-end cattle price assumptions, under the Agriculture Accounting Standard.

“For every one per cent change in AAco’s total herd valuation, AAco’s EBIT (earnings before interest and tax) is potentially impacted by $4 million.”

In August, the company posted a net loss of $30.3 million for the six months ended June 30.

Mr Farley will be appointed managing Director and chief executive, commencing December 1, the company said.

In August, the Queensland-based company said chief executive Stephen Toms and chief operating officer David Connolly would leave the company because AAco required a new perspective.

Chairman Stephen Lonie said the board was pleased to have attracted a man of Mr Farley’s talent to lead and manage the company into the future.

“David brings a wealth of experience in high level risk management and international marketing,” Mr Lonie said.

“The board looks forward to working closely with David, particularly in regard to the development of the company’s business plan and budget for the 2010 financial year and the completion of the Boards strategic review.”

Mr Farley, who began in 1975 as a jackeroo, was formerly managing director of Colly Cotton Ltd and chief executive of a US cotton growing and marketing co-operative, Calcot.

Mr Farley said while the past few years clearly had presented significant challenges, with drought, floods and a volatile Australian dollar, AAco was built on solid foundations.

“My immediate priority is to assist the board and management team to complete the business plan and budget for the 2010 year and to finalise the strategic review currently underway and I am looking forward to joining in December,” he said.

Mr Lonie said that the final details of Mr Farley’s employment contract were being completed, given the need to consider recent federal government legislative changes that affect the application of performance incentives.