IWG says it's hit bottom, reports strong demand in China and SE Asia

IWG said occupancy at its serviced offices "stabilised" and then "improved modestly" towards the end of the first quarter.

Over the three months to 31 March, open centre revenues were down 16.1% to £523.1m and pre-2020 sales fell 20.1% to £496.1m at constant currencies, with the firm pointing out that the year ago quarter saw the strongest start to a year ever.

The reverse was true of the latest three-month stretch, which IWG described as the "most challenging" ever.

However, IWG said the first quarter marked an inflection point and that positive momentum would continue throughout the next quarter.

"Whilst trading conditions remain challenging with lockdown restrictions continuing in many parts of the world, other markets have recently begun to open up and we are beginning to see some positive underlying trends," the company said in a statement.

Business in China was already ahead of pre-Covid 19 levels while South East Asia was exiting the crisis "faster" than other regions.

There were also signs of improvement in the US with Texas and Florida seeing growth.

"Recovery has been slower in geographies where restrictions have been more prolonged," the company added.

It also said that it was continuing to experience higher demand for hybrid working and enterprise membership products, together with "attractive" franchising opportunities.

IWG opened 43 locations during the quarter, including 10 from an acquisition, while closing another 55.

At period end, IWG had 63.3m square feet of office space, down from 63.5m in the same period one year ago.

Net debt on a pre-IFRS 16 basis reduced from £307.2m one year back to £293.8m. On 31 December 2020 it stood at £351.1m.

On the outlook, IWG said: "We look forward with cautious optimism to the coming quarters."