What to Watch: British Land burned by retail, Tullow Oil tumbles, and SSE profit

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Ghana's former President John Atta Mills turns on the valve to allow the first barrel of crude to flow from the Jubilee offshore oil field, December 15, 2010. Photo: REUTERS/Courtesy of CTM Communications/Tullow Oil/Handout

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

British Land burned by retail

The continued decline of physical retail has hit property developer British Land (BLND.L), which reported a slump in the value of its property holdings.

British Land, which owns Broadgate and Regent’s Place in London, said the value of its portfolio declined by 4.3% in the first half of the year, driven by a 10.7% crash in the value of retail properties it owns. Underlying profit slumped 10.1% to £152m.

“In a tough market, we have capitalised on opportunities to make retail sales, disposing of £236m of assets ahead of book value,” chief executive Chris Grigg said.

“Looking forward, we expect our markets to remain uneven, but we have kept debt levels low, our balance sheet is strong and flexible and we have a broad spread of expertise across our business. We expect retail to remain challenging, so we'll focus on driving operational performance and maintaining occupancy.

“In London, we expect the market to remain good, with supply relatively constrained and high quality space, in well-connected, vibrant parts of town continuing to attract demand from a range of businesses.”

British Land was among the biggest fallers on the FTSE 100, off 2.7%.

Tullow Oil tumbles

Shares in oil and gas exploration business Tullow Oil (TLW.L) cratered on Wednesday after warning of lower than expected production.

Tullow said that two recent discovers in Guyana had yielded heavy crude, rather than light, which is more difficult to commercialise.

“Not all oil is made equal,” said Nicholas Hyett, Equity Analyst at Hargreaves Lansdown.

“Heavy and sulphurous crudes are expensive to refine and as a result attract bargain basement prices. That significantly undermines the commercial value of Tullow’s Guyana assets – although the company hasn’t given up hope of finding more profitable oil elsewhere in the basin.”

Chief executive Paul McDade also said production in Ghana had “not met our expectations.”

As a result, Tullow cuts its forecast for oil production this year to 87,000 barrels per day, down from an earlier forecast of 89-93,000.

Shares in Tullow Oil crashed 20%.

SSE swings to profit

Energy giant SSE (SSE.L) swung to a profit in the first half of the year, the company said Wednesday.

SSE made a pre-tax profit of £129m for the first six months of 2019, compared to a loss of £285m in the same period last year.

The results are the first set of numbers since SSE agreed to sell its energy supply business to challenger brand Ovo, a deal which will be completed early next year.

SSE, which is now primarily a power generator and transmitter, said its business, excluding the sold retail arm, performed well as it increases its focus on renewable generation. It invested £446m in its regulated electricity networks and renewable energy.

“Clearly some headwinds remain in the sector with political uncertainty and aspects of UK government policy being subject to judicial process, however, we have strong optionality to create value through the low-carbon transition and deliver our dividend commitments,” SSE chairman Richard Gillingwater said.

JD Wetherspoon boss attacks governance code

The outspoken founder of pub chain JD Wetherspoon (JDW.L) has attacked rules designed to govern how businesspeople run companies and criticised a shareholder advisory group that has challenged his leadership.

Tim Martin, the founder and chairman of JD Wetherspoon, used a first quarter trading update on Wednesday to launch a broadside against the corporate governance code. Martin also criticised PIRC, which advises investors on those rules, and JD Wetherspoon’s own shareholders.

“There can be little doubt that the current system has directly led to the failure or chronic underperformance of many businesses, including banks, supermarkets, and pubs,” Martin said, calling for “urgent” reform of the rules.

Elon Musk picks Germany for gigafactory

Elon Musk surprised the audience at a car awards ceremony on Tuesday evening by announcing he would build Tesla’s (TSLA) first European plant near the German capital Berlin.

The Tesla boss was at the award ceremony hosted by Bild newspaper accepting a Golden Steering Wheel award for the Model 3.

"I actually have an announcement, which I hope will be well received,” said Musk. "We decided to put the first Tesla Gigafactory Europe in the Berlin area."

The news was a surprise as the states of Lower Saxony and North Rhine-Westphalia were long considered to be frontrunner locations for the factory in Germany.

According to Musk, the factory is to be built near the new BER airport, which has been sitting empty for years, unable to open due to endless problems. Musk said he hoped the factory would be faster to be ready than the airport. He also said that Tesla would set up an engineering and design centre in Berlin.

Markets drive on trade fears

European markets were in the red on Wednesday, after investors were left disappointed by US President Donald Trump’s speech on Tuesday.

Trump delivered a speech on Tuesday that market watchers had helped would bring some news on trade talks between the US and China.

“Donald Trump’s speech on Tuesday failed to give investors the information they wanted on trade policy and so we’ve got another down-day for UK and European equities,” Russ Mould, investment director at stockbroking platform AJ Bell, said. 

“Investors had hoped they would get some clarity on the potential rollback of tariffs. Disappointment on this front, together with heightened tensions in Hong Kong, has served to damped investor appetite for equities.”

The FTSE 100 (^FTSE) was down 0.8%, Germany’s DAX (^GDAXI) was down 1%, France’s CAC 40 (^FCHI) was down 0.7%, and the Euronext 100 (^N100) was down by 0.6%.

Overnight in Asia, Japan’s Nikkei (^N225) closed down by 0.8%, the Hong Kong Hang Seng Index (^HSI) was down 1.8%, and China’s Shanghai Composite (000001.SS) was down by 0.3%.

What to expect in the US

US stocks futures are pointing to a lower open. S&P500 futures (ES=F) were down 0.4%, Dow Jones futures (YM=F) were down 0.4%, and Nasdaq futures (NQ=F) were down 0.6%.

160 companies are reporting in the US later today.