(Sharecast News) – IWG is to cut costs after its hoped-for 2021 recovery was hit by the latest round of lockdown measures, the workspace provider said on Wednesday.
The FTSE 250 firm – formerly named Regus – said there had been early signs of a recovery in the fourth quarter of 2020, with improved sales activity.
But it conceded: “The continuation of the coronavirus pandemic, including new or preventative measures in both of the group’s markets, is now expected to prolong the impact of the pandemic on our business.
“We now expect our anticipated recovery in 2021 to be delayed.”
In response, IWG said it was implementing “further prudent actions to reduce costs”, including closing sites. A provision of £160m will be taken in the full-year results to 31 December, to reflect the network rationalisation, on top of the £155.8m of net charges directly related to the Covid-19 pandemic identified at the interim results.
“The anticipated annualised cost benefit arising from these actions, if fully implemented, is expected to be in the range of £325m to £375m,” IWG said. “The estimate cumulative benefit of the actions accuring to the group in further years will be significant and is anticipated to be around £2.4bn.”
Full-year 2020 group revenues are expected to come in at around £2.45bn, compared to £2.65bn in 2019.
“While 2020 was the most challenging year experience by the group, and these conditions are likely. To persist will into 2021 before we see the environment improving, it has accelerated the shift to a new way of working signification, and we have continued to invest for the future, development new products and services. Hybrid working has become the new norm and in view our is here to stay,” IWG said.
“Although at an early stage, conversations have restated on several master franchise agreement. Therefore, while current market conditions remain very challenging, the future of flexible and hybrid working looks very positive.”
As at 0830 GMT, shares in IWG were off more than 2% at 327.8p.
