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WeWork rival IWG’s half-year profit surges on high demand, improved pricing

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2023 08 08T061605Z 1 LYNXMPEJ77061 RTROPTP 4 IWG RESULTS

WeWork rival IWG’s half-year profit surges on high demand, improved pricing

By Aby Jose Koilparambil

(Reuters) -Office rental firm IWG retained a “cautiously optimistic” outlook after posting a 48% surge in half-year profit on Tuesday, helped partly by high demand for its spaces and improved pricing.

Office landlords are slowly recovering from pandemic lows as employers opt for permanent hybrid working models, where employees need to be in the office for a stipulated number of days in a week or a month.

“Our outlook for the full year remains cautiously optimistic given the growing demand for hybrid working solutions tempered by FX headwinds and a challenging economic and competitive environment,” the company said in a statement.

The UK-listed owner of the Spaces and Regus brands said adjusted core profit from continuing operations for the six months ended June 30 jumped 48% on a constant currency basis to 198 million pounds ($252.6 million).

Switzerland-headquartered IWG said its half-year system-wide revenue, which also includes revenue from franchise and joint-venture partners, grew 16% to a record 1.68 billion pounds.

Worka, a digital platform which enables hybrid working, saw revenue jumping 32% to 153 million pounds.

“Notwithstanding forex headwinds and a challenging economic and competitive environment, the operational and financial progress manifest in today’s results is extremely encouraging,” Investec analysts said in a note.

IWG, which has over 4,000 work locations in more than 120 countries and counts Microsoft, Disney, Samsung and HSBC among others as its clients, said it has initiated a review of its reporting currency and the potential implications of reporting under US GAAP rather than IFRS.

The review, IWG said, was undertaken as revenue denominated in or linked to U.S. dollars represent the majority of the group’s revenue as well as the recent volatility in sterling.

($1 = 0.7840 pounds)

(Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Rashmi Aich and Stephen Coates)