IWG warns over trading as recovery comes through slower than expected

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IWG PLC (LON:IWG), the serviced offices specialist, has cautioned that the recovery of its markets has been slower than expected.

Some markets, such as the US have bounced back strongly, it said but occupancy across the group has been lower than previously anticipated as a result of the prolonged impact of COVID-19, including continuing lockdown restrictions and the emergence of new variants of the virus in some markets.

“Accordingly, this will delay the anticipated recovery in our business and, given the operational gearing of the group, 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,” said the statement.  

The former Regus posted underlying profits of £134mln in the year to end-December and a pretax-loss of £564mln.

Net debt was £293mln as of 31 March.

Countries where restrictions are easing, such as the US, momentum is building and service revenues are starting to improve, said the statement.

These positive trends suggest the issues currently are down to timing and a strong improvement in profitability and cash generation will occur as lockdown restrictions ease.  

Accordingly, the board’s expectations for a strong recovery in 2022 are broadly unchanged.

Demand for flexible working options is high, said IWG and good progress is being made in relation to larger master franchise agreements.

Shares recovered from a heavy early fall to down 7% at 340p near the close.

 

–adds share price —

 

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