IWG profits fall as London market slows
IWG pointed to a ‘slow’ market in London, particularly in the Square Mile.
Profits at International Workplace Group (IWG) fell last year after the office space company was stung by increased costs, losses from new centres and a slowdown in London.
IWG, which operates brands including Regus, Open Office and Signature, posted a 14% decline in pre-tax profit to £149.4 million in 2017.
Investment in new office space and associated overheads dragged IWG down in the period, but the group insisted: “Strategically, these are the right actions to take advantage of the market growth opportunities and we have won further new corporate account contracts as a result.
“In the short term, however, they impacted group profitability.”
IWG also pointed to a “slow” market in London, particularly in the Square Mile as Brexit takes its toll.
But revenue rose 5.3% to £2.35 billion as is added 314 new locations, taking its global tally to 3,125 across 1,000 cities.
IWG said that it will continue to grow, spending an estimated £190 million on 230 offices in 2018.
The firm believes there is “fast approaching a tipping point” in flexible working on the horizon which will help drive sales.
“All the evidence suggests that we are fast approaching a tipping point which will see the flexible workspace option, in which we are the leading global supplier, become the norm for progressive businesses worldwide as they seek flexibility, employee satisfaction and cost efficiency,” IWG said.
Earlier this year the firm was courted by Brookfield Asset Management and Canadian private equity firm Onex over a possible takeover, which eventually came to nothing.
Boss Mark Dixon said: “2017 was an important year for the flexible workspace industry globally and we remain confident that IWG will continue to drive, and benefit from, the accelerating customer demand and growth of flexible working.
“We will continue to invest in our network so we can deliver future earnings growth and increasing shareholder returns.”