THE head of Australia's largest cattle company bemoaned the effect of the high dollar yesterday and lashed out at the Reserve Bank after reporting a $4 million loss.
AACo managing director David Farley said he was ''surprised'' the dollar was holding up so strongly, given hard commodity prices were coming off and productivity growth had stalled. He expected the dollar to decline.
''I'm surprised we are the only country that can offer yield on currency. I'm surprised the Reserve Bank hasn't reacted and reduced rates to ensure our international competitive position is maintained.''
Mr Farley said the high dollar did reduce profit margins for AACo as an exporter ''but we have to live with it''.
AACo shares rose 2¢, or 1.8 per cent, to $1.14 after the company recorded a 15 per cent increase in sales on favourable growing conditions. Its loss after tax was an improvement on the $12.6 million loss in the first half of 2011 (which was not affected by the June 10 ban on live cattle exports to Indonesia).
We're in the last six months of a 36-month turnaround,'' Mr Farley said. ''We're forecasting profitability in the December half. We're not actually coming out with a number. When you're dealing with live, breathing, grass-eating animals and at the whim of mother nature and God, it's a brave man to forecast.
''But we're confident we'll have the business in black-ink profit at December. We're also confident we'll have a surplus operating cash flow coming off the profits as well. We're also confident we've got the breeding herd well positioned for next year.''
One analyst speaking without attribution said the crux of AACo's problem was that its free cash flow remained negative and it needed to get a better return on more than $1 billion in capital employed, mostly in property and its cattle herd. ''That's why it trades at a significant discount to NTA [net tangible asset backing, of $2.13 as at June 30]''.
On the proposed $83 million abattoir at Darwin, Mr Farley said AACo had been ''approached by a lot of international investors to invest in the abattoir alongside us''.
AACo exported live cattle to seven new markets during the half, including Philippines, Malaysia, Vietnam, China, Japan and Egypt.
Mr Farley said that with the drought in America and the cost of corn, cattle prices were rising again.