IWG’s profits surge amid ‘Big Bang’ of hybrid working: Firms’ desire for a better mix of office and WFH boosts earnings
- IWG revealed operating profits rose by 154% to £94m for the 6 months to June
- The office rental firm’s system-led revenues also rose by 14% to a record £1.7bn
- A further 400 new deals were signed by the group in the first half of 2023 alone
Workspace rental firm IWG’s first-half profits more than doubled as the sustained popularity of hybrid working led to record revenues.
The world’s largest office space provider revealed operating profits jumped by 154 per cent on a constant currency basis to £94million for the six months ending June.
Mark Dixon, IWG’s chief executive, said the period marked a continuation of the ‘Big Bang’ that started the previous year when businesses began adopting flexible working policies.
Flexibility: The sustained popularity of hybrid working led to record first-half revenues for IWG
He noted that demand for the group’s offices and products was growing among companies seeking to lower their real estate costs.
IWG’s system-led revenues rose by 14 per cent to a record £1.68billion, largely driven by growing sales in the Americas and EMEA regions, with an additional boost provided by digital platform Worka.
IWG has been accelerating its capital-light growth strategy, whereby commercial landlords hire the firm to manage their offices.
The FTSE 250 business credited this approach for signing a further 400 new deals in the first half of 2023, having agreed to 462 during the whole of last year.
Dixon added: ‘We continue to be well placed to deliver further revenue, profitable growth and reducing leverage as more companies permanently embrace hybrid working as their preferred model with IWG set to be the biggest beneficiary.’
Yet IWG has adopted a ‘cautiously optimistic’ outlook for the current financial year, given the more troublesome economic backdrop and adverse foreign exchange fluctuations.
As a result, it has kept annual guidance unchanged on adjusted underlying earnings and continues to expect net debts will decline this year.
Analysts at Investec said: ‘Longer term, [IWG’s] market-leading position in the structurally growing hybrid working industry has compelling strategic attractions.’
Headquartered in Switzerland, IWG has around 3,400 locations across 120 countries and counts Samsung, Paypal, Spotify, and Blackrock among its clients.
IWG’s bumper results come as firms increasingly order their staff back to the office, with many executives citing the benefits to productivity and creativity of in-person collaboration.
On Monday, teleconferencing business Zoom, whose name became synonymous with remote working during the pandemic, told employees who live within 50 miles of one of its offices that they must come in at least two days a week.
Major corporations who have insisted on all or some of their staff coming into the office five days a week include banking giants Goldman Sachs and JP Morgan and white goods seller AO World.
IWG shares were 0.2 per cent, or 0.3p, lower at 150.8p on Tuesday morning, meaning they have fallen by approximately 23 per cent over the past 12 months.