IWG FY pre-tax losses narrow amid strong demand

Serviced offices provider IWG said on Tuesday that pre-tax losses had narrowed in the twelve months ended 31 December amid strong demand and also stated it was "cautiously optimistic" for 2023.

IWG said it had delivered its highest-ever revenue performance in its 34-year history, with both system-wide and revenue growth of 24% at actual currency to £3.08bn and £2.74bn, respectively, reflecting both increased demand for flexible working and higher pricing.

All three geographic regions reported good year-on-year revenue growth, with IWG's largest region of Europe, the Middle East and Africa seeing strong revenue growth of 17% to £1.199bn, while revenues from the Americas rose 8% at constant currency to £1.02bn. IG noted that Asia still had "significant Covid-19 restrictions" throughout much of 2022, particularly in China, and therefore revenue growth was just 2% to £248.0m.

As a result, pre-tax losses from continuing operations narrowed from £259.0m to £105.0m, while gross profits surged 124% at constant currency to £575.0m and underlying earnings rose 22% to £1.33bn.

While overheads increased from £328.0m to £427.0m, cash flow from business activities turned positive and printed at £151.0m, up from the prior year's outflows of £219.0m.

Going forward, IWG said demand for hybrid working solutions continued to grow and stated that whilst macroeconomic headwinds around global growth remained, which can impact demand, plus challenges for the group from inflation and interest rates impacting costs, it remains "cautiously optimistic" about the outlook for 2023.

"We are confident that EBITDA will be in line with management's expectations with net debt falling during the year. However, it should be noted that the group is operationally leveraged, resulting in profitability moving up and down with relatively small changes in revenue," said IWG.

As of 0830 GMT, IWG shares were down 0.29% at 187.70p.

Reporting by Iain Gilbert at Sharecast.com