Workspace operator IWG has issued a profit warning as it continues its rapid expansion programme.
IWG, which is the object of a takeover battle, said group operating profit for 2018 would be below management’s previous expectations by £15m to £20m.
It blamed the result on the cost of opening new space and the weak performance of its UK business, adding that local management was addressing the latter.
The firm is investing £230m to add 275 new locations – 6.7m sq ft – to its network after noting that its UK business “is not performing to management expectations”.
The London-listed flexible workspace operator, which is evaluating a number of takeover offers, said previous guidance issued in Q1 was for around £200m of net growth expenditure, equating to an additional 5.7m sq ft and 230 new locations.
IWG said it was “confident” that its “additional growth investment will generate good returns in future” as it expanded its global network.
The company is fielding proposals from private equity firms Terra Firma and TDR Capital and American real estate investment groups Starwood Capital and Prime Opportunities.
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