Shares in the office space provider dropped more than 15 per cent to 309p on Monday
Shares in office space provider IWG tumbled this morning after it warned that profits will be well below last year’s level as business is recovering at a slower pace than it expected.
IWG said it saw some improvement in occupancy in April, May and June, but that was not as good as it thought it would be.
Continued lockdown restrictions and the emergence of new Covid variants in some countries have impacted the return to the office and this has delayed the ‘anticipated’ recovery.
This is expected to have a significant impact on the Group’s results for 2021, with underlying Group EBITDA for 2021 now expected to be well below the level in 2020, it added.
Investors were spooked by the profit warning, with shares in IWG dropping more than 15 per cent to 309p in morning trading on Monday.
IWG said Europe is lagging behind the US, where it has seen ‘positive momentum’ in workers going back to the office, particularly in big cities like New York.
But while some employees may be slowly returning to the office, many companies in city centres across the world are downsizing their office spaces and looking for more flexibility, IWG said.
Smaller offices, with people working either from home or close to their home is the future, with IWG already seeing this happen in many of its markets, bosses told analysts this morning.
The company said they were well positioned to offer work spaces for hybrid working, where employees spend some days between the office and home and expect to see a strong recovery next year.
Since our first-quarter trading update, we have continued to see unprecedented demand for our flexible work products as many more enterprises adopt hybrid working, the company said.
IWG recently struck its biggest deal to date with Japanese telecoms group NTT to give its 300,000 employees around the world access to IWG’s office network.
Interest in partnering with IWG continues to strengthen significantly and we have a very strong pipeline of potential partners wanting to work with us to grow the platform, the company added.
It said: As previously indicated, good progress is being made in relation to larger master franchise agreements, with several in the final stages of discussions, and we anticipate making further announcements in this regard in due course.