Shares in serviced office giant IWG plunged more than 15% this morning after the firm warned its profits would be “well below” last year in a stark illustration of how working from home has disrupted the firm.
Shares in the company, which has some 3300 sites including around 80 in London, fell 56.4p to 310.1p after it cautioned about the “prolonged impact” of Covid-19 in some markets.
The update came as ride-hailing app Uber said that while trips in the UK have recovered to pre-pandemic levels following the relaxation of restrictions, London is lagging slightly behind other regions. The capital is suffering from low office worker numbers and tourists in town.
FTSE 250 company IWG said: “Whilst we have continued to see strong recovery in some of our markets since our first quarter trading update, including positive occupancy momentum in the US, the overall improvement in occupancy across the whole group has been lower than previously anticipated.”
It pointed to the prolonged impact of Covid-19, including continuing lockdown restrictions and the emergence of new variants of the virus.
The firm, led by Mark Dixon, said: “Accordingly, this will delay the anticipated recovery in our business.”
Underlying profit in 2021 is expected to be “well below” what was recorded last year.
IWG was hit by disruption from the pandemic last year as people were urged to work remotely.
Dixon said India and Malaysia have been particularly badly hit with the devastating impact of new variants and lockdowns. London is still not at pre-Covid levels, but it is less quiet than it was, and Dixon added that the rest of the UK is showing strong signs of improvement.
But he added that some companies “are saying let’s wait until after the summer” to make property decisions.
Despite the latest disruption, IWG reported “unprecedented demand” for flexible work products as more businesses adopt hybrid working. IWG offers desks and meeting rooms via lettings that can be monthly, weekly and daily, or longer if needed.
Among those adapting to the new world of office work is Sir Martin Sorrell’s advertising agency S4 Capital, which has terminated several office leases.
Sorrell said: “We always knew that our people would adapt effortlessly and productively to working from home. As a result, we are further developing a hybrid office model. We have terminated a number of office leases, which will enable us to integrate our operations even faster than we originally thought.”
IWG’s expectations for a strong recovery in 2022 are broadly unchanged.