Wednesday 12 December 2018

IWG slips on profit warning as suitors circle

IWG said operating profit for 2018 is expected to be below previous expectations.

IWG shares were in the red on Wednesday (PA)
IWG shares were in the red on Wednesday (PA)

By Ravender Sembhy, Press Association City Editor

Shares in takeover target IWG dipped after the Regus owner warned that profits would take a hit off the back of a poor performance in the UK.

The workspace provider said its UK business “is not performing to management expectations”, adding that an acceleration of growth will weigh on the firm in the form of increased costs.

As a result, IWG said operating profit for 2018 is expected to be below previous expectations of between £15 million and £20 million.

We are confident that this additional growth investment will generate good returns in the future as we expand our global footprint and network to meet increasing demand IWG

“Higher network growth brings additional short-term opening losses, along with incremental overhead costs to support the growth.

“Group operating profit for 2018 is now expected to be below management’s previous expectations,” IWG said.

Shares were down more than 4% following the update.

IWG continued: “Nonetheless, we are confident that this additional growth investment will generate good returns in the future as we expand our global footprint and network to meet increasing demand.”

It added that the weak performance of its UK unit is being addressed by local management.

The firm has been the subject of intense takeover interest in recent months, with private equity firms Lone Star Europe, Starwood Capital, TDR Capital, Prime Opportunities, Brookfield Asset Management and Onex having all expressed an interest.

Terra Firma, the investment vehicle of City financier Guy Hands, is the latest to throw its hat into the ring.

The London-listed group has serviced offices in around 120 countries, operating brands including Regus, Open Office and Signature.

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