ASX Market Wrap: Weather, retail sales and a court case

Another company blames the weather for lower profits and iiNet wins High Court case

Scott Phillips (TMFGilla)

Scott Phillips is The Motley Fool’s Chief Investment Officer in Australia. He is Advisor of The Fool’s flagship investment service, Motley Fool Share Advisor and the Portfolio Manager of Motley Fool Everlasting Income and Premier Portfolio, as well as running our most premium service, Motley Fool Platinum. He is passionate about investing, having managed his own portfolio for over 15 years. A dyed-in-the-wool Fool (in the best way), he has been a member of The Motley Fool since 1999. Scott holds a Bachelor of Commerce (Management) and a Graduate Diploma of Accounting. Before joining The Fool, Scott worked in various Sales and Finance roles in industry, which has allowed him to see the good, bad and the ugly of corporate management close-up. Giving him a great understanding of the way businesses run – and what separates the business wheat from the chaff – Scott wholeheartedly agrees with Warren Buffett when he said he was a ‘better investor because I am a businessman and a better businessman because I am an investor’. Scott left a successful career to follow his passion – helping our members achieve the best possible investment returns, and helping Australians learn to better manage their money. It’s no surprise he ended up at The Motley Fool.

Published April 20, 2012 4:54 pm AEST

After a soft lead from Wall Street overnight, the Australian market spent most of Friday in negative territory, before the S&P / ASX 200 (ASX: XJO) slowly worked its way back to close about even at 4,366.5 points.

Retail sales were the big story of the day, with Woolworths (ASX: WOW) announcing soft revenue numbers for the third quarter. The ongoing price war with competitor Coles – owned by Wesfarmers (ASX: WES) is taking its toll, with price deflation of 4.4% in the company's eponymous grocery chain – a strategy that seems to be helping Coles attract shoppers, but one that is crimping prices and restraining market growth in both chains, as well as the IGA supermarkets supplied by Metcash (ASX: MTS).

A battle between major Internet Service Provider (ISP) iiNet (ASX: IIN) and a coalition of major Hollywood studios and local content providers was the other big news. The Australian High Court handed a unanimous and comprehensive victory to iiNet – and by extension the other Australian ISPs including TPG Telecom Ltd (ASX: TPM), Telstra Limited (ASX: TLS), Optus, a subsidiary of Singapore Telecommunications (ASX: SGT) and M2 Telecommunications Limited (ASX: MTU)-owned iPrimus – holding that the ISP had no case to answer against claims that was responsible for illegal content downloaded by its subscribers.

In response, the content owners have announced their intention to lobby the federal government to strengthen Australian copyright law, claiming Australia was lagging copyright developments overseas.

Australia has had its share of extreme weather in the past few months, and yet another company used the unseasonably poor summer to explain a results shortfall. Hot on the heels of recent announcements from BHP Billiton (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue Metals (ASX: FMG) that production volumes that were impacted by weather events in Western Australia, building materials company Boral (ASX: BLD) cited rain and poor construction activity on the east coast of Australia for its profit guidance downgrade, wiping between 12% and 15% off their previous guidance.

The Energy and Health Care sectors led gains on the ASX today, both up 1.0%, while Utilities and Industrials led the losers, down 0.7% and 0.4% respectively.

Karoon Gas (ASX: KAR) was the best performer from the ASX 200 today, with shares up 6.9%, while St Barbara (ASX: SBM) and Senex Energy (ASX: SXY) both posted gains of over 6%.

Bradken (ASX: BKN) was the largest ASX 200 loser, with shares off 10.8%, as a result of an earnings guidance downgrade. Fletcher Building (ASX: FBU) was among the strongest losers, dropping 3.8% while Boart Longyear (ASX: BLY) fell 2.6% on the day.

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