Oct. 27 (Bloomberg) -- WorleyParsons Ltd., Australia’s biggest engineering company, fell the most in more than eight months after saying it expects a drop in full-year profit if the Australian dollar’s rally continues.

WorleyParsons’ shares fell 8 percent to close at A$26.68 in Sydney trading, the most since Feb. 4.

Net income for the year ending June 2010 is expected to fall between A$35 million ($32 million) and A$40 million if the Australian currency remains at current levels, Chairman Ron McNeilly said at the company’s annual general meeting today.

“The strong appreciation of the Australian dollar has had a negative impact on the translation of foreign currency earnings,” McNeilly said. “Consequently, at the end of the first quarter, we are performing below our expectations. We expect this trend to continue into the second quarter.”

Should the dollar strengthen past this period, the decline in profit would be more than the “modest” drop forecast in WorleyParsons’ August shareholder report, McNeilly said.

The company’s decision to cancel some projects due to a slump in metals demand will also hit growth, according to Angus Gluskie, who oversees about $300 million at White Funds Management Pty. in Sydney.

“Not only is the currency having an adverse impact, but the operational earnings were soft as a result of project cancellations,” Gluskie said in a telephone interview. “Both factors should have been evident to investors, but it’s clear at least some in the market had been overly bullish on the near- term outlook.”

WorleyParsons will see the benefits from projects the company has won in the six months to December in future years, McNeilly said.

To contact the reporter on this story: Nichola Saminather in Sydney on nsaminather1@bloomberg.net

Last Updated: October 27, 2009 01:36 EDT