The strong Aussie dollar continues to carve up the share prices of leading Australian companies.
The dollar ended at 92.30 USc in New York at the weekend and it was that strength which was behind the majority of poorly performing shares on the ASX 200 last week.
A look at the top 10 performing stocks in the ASX 200 last week reveals shares boosted by one-off factors such as Fairfax Media's 6% rise to $4.90 ahead of its impending takeover of the Southern Cross Broadcasting radio stations and Southern Star production house this week.
Newcrest was again boosted by the higher gold price, Harvey Norman was a beneficiary of the rising dollar, Oxiana rose on takeover speculation, as did BlueScope Steel and Asciano, while Westpac had a very strong earning report and gained 4.3%, despite a 50c a share fall on Friday to $30.48.
AGL Energy made the list because it did the smart thing on Friday and took the cash: all half a billion of it, instead of spending over a $1 billion on more assets.
With its credibility damaged, it wasn't hard to see why the money and not the box was the prize of AGL, and the market rewarded it with a 7.2% rise over the week and almost 3% half of that on Friday.
The Seven Network stood out with a $1.32 rise (or 10.2%) to $14.24, although it did fall 22c on Friday in the sell-off.
But among the worst performers, Downer EDI stood out. There was little or no currency damage: just another earnings downgrade for a company that must be on earnings watch negative every time it approaches a reporting period.
Roc Oil shares tumbled, as did Santos, despite record oil prices Thursday and Friday. The strengthening Australian dollar made sure of that. Roc fell 13.2% and Santos, 8.7%.
Falling zinc prices, the strong dollar and the realisation there's a cash discount (for making the wrong call on investing $1.6 billion), undermined Zinifex's share price and it ended the week down nearly 11%.
Alesco and Tishman Speyer lost 6.3% and 6.2% respectively: Alesco because of the poor outlook for home building (although it is more into renovations these days) and Tishman because it's a strong Aussie dollar victim and has exposure to the sluggish US economy. Paperlinx was again hurt by the dollar. Likewise CSL had another poor weak, down 6.6%. West Australian Newspapers was a loser, down 5.6%.
That was in contrast to the sharp rise for its major shareholder, Seven Network.
Jubilee Mines was the best performer, thanks to the agreed bid from Xstrata. Jubilee's share price jumped 37.7%.
Downer EDI's role as the market's serial underperformer continued on Friday with the third profit warning of the year emerging at the company's 2007 AGM, and the biggest loss for the week in the ASX 200.
It wasn't the message investors were hoping for: after all a new broom and new approach had been promised after the earnings downgrade in August.
The shares fell 13.5% to $5.79 to be among the week's worst performers as a result of the news.
Shareholders were warned that earnings were likely to be flat because of softness in its mining division caused by lost contracts, wet weather and port congestion.
"Earnings before interest and tax (EBIT) for the year will be around $280 million," interim chief executive, Brent Waldron, told AGM.
August saw the engineering giant post an underlying EBIT of $281 million in 2006-07, which was a nice way of putting the best complexion on a miserable year.
The reality was that Downer disappointed investors when it reported a net profit of $101.5 million for the 2007 year, missing its guidance of $160 million. And no amount of spin about underlying earnings could make up for the downgrade.
But ever optimistic, the company then forecast a stronger fiscal 2008, with "low double-digit growth in EBIT and substantially improved profit", but that wasn't to be.
The CEO was flicked and a review of operations promised.
Mr Waldron said on Friday that most of the company's divisions were "doing well" but that he "did not want to depend on over-performance from them at this early stage in the year".
He said underlying EBIT for the three months to September 30 grew by 16% to $58.2 million and revenue for the quarter was up 5% to $1.332 billion.
As in 2007, troubles in the company's mining division seem to be at the root of the earnings pressure.
Mr Waldron said:"As I look forward I am concerned about some softness in the mining division because of some challenges experienced in the first quarter.
"We've had some problems with wet weather conditions on the east coast of Australia, which affected our coal mines, plus the well-known problems with port and rail infrastructure which caused volumes to be pared back in the quarter.
"Also there were a couple of contracts that we anticipated that we would win … but we didn't."
Other companies are facing similar problems, so it is not alone.
But there is a boom in infrastructure spending in Australia while the mining industry is going gangbusters, but so too are the cost of raw material and energy, and labour is short.
Downer chairman, Barry O'Callaghan, said at the meeting that the company would benefit from government infrastructure contracts.
"The 2008 outlook is positive and underpinned by record levels of spending on infrastructure by governments across all of the geographies in which we operate," he said.
"Downer EDI is well positioned to capitalise on these trends through our core competencies in supply, service and maintenance."
Investors at the meeting said Mr Waldron signalled that it might take time to "win back the trust of the investment community" and Mr O'Callaghan said the board was still deli
