WeWork rival IWG has a growing debt problem

People use laptops in a Spaces office workspace, an IWG brand, in London, Britain December 1, 2021. REUTERS/May James

Join now for FREE unlimited access to Reuters.com


LONDON, Aug 9 (Reuters Breakingviews) – IWG’s (IWG.L) business model looks a bit fragile. Shares of $2 billion rival WeWork (WE.N) fell 10% on Tuesday after the loss-making firm said inflationary pressures, war in Ukraine and shutdowns of markets like China had caused the market to stagnate. operating profit at a negative 2.2 worse than expected. million pounds in the first half. This is despite leasing activity and margins rising post-pandemic.

Debt is another challenge for the eternal candidate for recovery. In the six months to June 30, IWG’s net debt rose 6% to almost £7.2 billion, more than 5.5 times the company’s revenue. The danger for CEO and founder Mark Dixon is that stubbornly high inflation will erode some of the benefits of his cost-cutting program as the cost of servicing the company’s debt continues to rise. And, as key markets like the US and UK head into a downturn, IWG’s model of offering tenants short-term contracts will be vulnerable as businesses seek to cut costs. A strained balance sheet will make it harder for Dixon to reap the promised benefits of the post-pandemic shift to hybrid working. (By Aimee Donnellan)

(The author is a Reuters Breakingviews columnist. Opinions expressed are their own. Updates to add related links.)

Join now for FREE unlimited access to Reuters.com


Follow @Breakingviews on Twitter

Capital Calls – More concise information on global finance:

Abrn fights against mediocrity Read more

Activists secure partial victory in Nelson Peltz feud

Amazon ignores FTC’s Khan while vacuuming companies Read More

Beyond Meat craves SPAM Read more

Tencent faces a new video game merger and acquisition challenge Read more

Join now for FREE unlimited access to Reuters.com


Editing by Neil Unmack and Pranav Kiran

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias by principles of trust.

Comments are closed.