IWG PLC (LON:IWG) has said the impact of the coronavirus pandemic has been “greater than we imagined” as the office space group reported a drop-off in revenues for its third quarter.
In a trading update for the three months to September 30, 2020, the FTSE 250 firm reported that revenues for the period were down 10.2% at £583.3mln, while occupancy rates for its operations opened before the end of 2018 were down 4.1 percentage points at 70.5%. The firm also said it has shuttered 33 locations during the quarter, shrinking its worldwide network to 3,359 locations.
READ: IWG expects tough third quarter as interim loss widens
The company said the third quarter had been “challenging” as a result of the pandemic, adding that so far during the year it had supported its customers with measures such as rent deferrals totalling £80mln, a figure that was expected to rise to £100mln by the end of the year.
IWG also said that while it has experienced “good sales activity levels” in July, August and September, this was being offset by customer churn and the “significant impact” of the pandemic on service revenues, which accounts for around 28% of total revenues.
Looking ahead, the company said while market conditions remained “very challenging”, it was now starting to see improvements in sales activity which provided a basis to begin 2021 in a strong position.
The firm also said it will keep a “laser focus” on its financial position, saying it is on track to achieve annualised cost savings of around £200mln through coronavirus-related actions, which in turn will deliver “a much-improved profitability performance in 2021 and beyond”.
“2020 has presented the toughest challenge the group has experienced since its formation 31 years ago. It is an unprecedented storm, but with the decisive actions we have taken across the business we are navigating its impact and look forward to entering 2021 as a stronger, more profitable business capable of increased cashflow generation supplemented with potential revenue recovery”, IWG concluded.