UK Edition
Office firm IWG warns on profits as slower London market and natural disasters hit trading
A weaker London market and disruption as a result of natural disasters has hit serviced office provider IWG, sending its shares down as much as 36pc as it warned on profits.
The firm, which was previously known as Regus and still trades using the brand, said that previously anticipated improvement in sales had been weaker than expected and so it has not made up any of the 1.9pc fall in revenues which it announced earlier this year.
While the company said that it would continue to invest in opening new offices around the world, it acknowledged that in the short term this means its overheads will rise and its new centres will make a loss when they open.
“Group operating profit for 2017 is now expected to be materially below market expectations and in a range of £160m to £170m,” the company said.
Shares in the firm dropped to as low as 203.20p on Thursday.
IWG has fought to compete with newer companies such as WeWork, which offer a trendy office environment in a bid to attract start-ups.
But Mark Dixon, IWG’s chief executive, said the firm’s strength was in its spread of offices across the world and he was confident that demand would continue to grow. The company has almost 3,000 centres in 115 countries.
Mr Dixon blamed the poor performance in the last few months on a “blip” in some of its markets, adding “the consensus expectations had got too high and our trading had got too low”.
“We had a good performance in many of our markets, but we also had markets which showed good momentum in the first half of the year but blipped in the third quarter,” he said. This had been exacerbated by the hurricanes in the US and the Mexican earthquake, he added.
He defended the firm’s decision to continue expanding. “There’s tremendous demand for what we’re doing,” he said.