IWG narrows first-half losses amid 'strong' demand for hybrid working

In the six months to 30 June, adjusted pre-tax losses narrowed to £70.2m from £163.3m in the same period a year earlier, with system-wide revenues up 22.3% at £1.4bn. IWG said this was driven by strong demand for hybrid working.

Meanwhile, earnings before interest, tax, depreciation and amortisation rose to £122.9m from £5.4m.

Chief executive Mark Dixon said: "With hybrid working becoming the preferred operational model for a rapidly growing number of companies, we remain confident about the continuing structural growth drivers at play in our industry.

"We have delivered strong revenue performance with record visibility of the forward order book with occupancy and pricing improvements. We continue to build resilience and cost efficiency into our business, and we have repeatedly demonstrated our ability to address new challenges. These attributes will be important as we continue to navigate the headwinds created by increased geopolitical tensions in Europe, general inflationary pressures, and the ebb and flow of Covid-related restrictions in some markets.

"Overall therefore, we look forward with cautious optimism to the remainder of 2022."

At 1140 BST, the shares were down 10% at 172.85p.

AJ Bell financial analyst Danni Hewson said: "IWG’s latest results indicate progress in the business, with improvements in both occupancy rates and pricing.

"Unfortunately, it cannot escape the cost pressures hurting companies worldwide. Neither can it be relaxed about Covid as certain markets continue to experience lockdowns, which has a negative impact on demand for some of its serviced offices.

"The market did not like the results, with the shares diving more than 17% in early trading. Before the numbers came out, analysts had forecast IWG returning to profit this year at £48.6 million. Given the ongoing cost pressures and lockdown disruptions, it seems likely this estimate will have to be scaled back."