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Regus owner IWG says new Covid variants will push profits lower

IWG, the world’s largest flexible space provider, has said lockdowns and new Covid variants will push profits this year “well below” 2020 levels.

The company, formerly known as Regus, reported a £620m annual loss for 2020, when its finances were hit by social distancing rules, and working from home resulted in empty offices.

The UK-listed company, which is headquartered in Switzerland, reported strong recovery in some markets including the US. However, occupancy levels across the whole group were lower than expected because 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,” IWG said, adding that underlying earnings would come in “well below the level in 2020”.

The news sent IWG shares tumbling more than 15% to 310p on Monday morning.

IWG is banking on the increased popularity of hybrid working, as a growing list of companies allow their employees to split the week between their home and an office desk, but not necessarily inside their corporate headquarters.

The company said it was seeing “unprecedented demand” for flexible working packages, and was finalising a string of agreements. “We have an increasing pipeline of corporate customers on network-wide deals and service revenues are starting to improve,” it said.

The workspace provider has signed a global deal with London-headquartered bank Standard Chartered that will allow its 95,000 workers to access IWG’s 3,300 global offices, which may be closer to their homes than the lender’s own sites.

Two-thirds of IWG’s offices are located in suburbs and smaller towns, and one-third in bigger cities.

The firm also reached an agreement with the UK government in April that will give civil servants the chance to drop in to private office space in IWG buildings in 10 cities.

IWG, which has 300 UK offices, forecast that the easing of lockdown restrictions and the unprecedented demand for hybrid working would help improve profitability and cash generation from 2022.

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Regus owner IWG says new Covid variants will push profits lower

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