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(Alliance News) - A leading provider of office workspace in the UK on Monday issued a profit warning, as continue lockdown restrictions and government advice to work from home drag on deeper into 2021.
IWG guided to full-year earnings "well below" 2020 due to a slower-than-expected recovery.
The flexible office provider said it has continued to see strong recovery in some of its markets since updating on first quarter activity, but the overall improvement across the group has been less than expected due to "prolonged" Covid-19 fallout, including lockdown restrictions and the emergence of new variants.
This will delay IWG's anticipated recovery and, in turn, is expected to have a "significant impact" on its 2021 results, with underlying group earnings before interest, tax, depreciation and amortisation now seen "well below" 2020's level. However, the company said its expectation for a strong recovery in 2022 is unchanged.
IWG said: "In markets where Covid-19 related restrictions are easing such as the US, we have seen positive momentum. Occupancy is improving, enquiries have reached pre-Covid-19 levels, we have an increasing pipeline of corporate customers on network-wide deals and service revenues are starting to improve. These positive trends support the board's view that the prolonged impact of Covid-19 on the group's 2021 results is one of timing."
The company's comments came as Health Secretary Matt Hancock said the UK government was "absolutely open" to delaying the June 21 unlocking of England. He also implied that social distancing could continue beyond the final stage of the prime minister's road map.
Media reports have said that revisions to the road map could see the government backtrack on encouraging a return to the workplace, while social distancing in bars and restaurants is likely to remain, along with limits on audiences in theatres and cinemas.
IWG shares were down 16% early Monday.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: down 0.1% at 7,060.24
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Hang Seng: down 0.6% at 28,749.11
Nikkei 225: closed up 0.3% at 29,019.24
DJIA: closed up 179.35 points, or 0.5%, at 34,756.39
S&P 500: closed up 0.9% at 4,229.89
Nasdaq Composite: closed up 1.5%, at 13,814.49
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EUR: down at USD1.2154 (USD1.2172)
GBP: down at USD1.4118 (USD1.4169)
USD: up at JPY109.52 (JPY109.44)
Gold: down at USD1,883.82 per ounce (USD1,893.48)
Oil (Brent): up at USD71.72 a barrel (USD71.55)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
Ireland June Bank Holiday
0830 BST UK Halifax house price index
1000 EDT US employment trends index
1500 EDT US consumer credit
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China's exports rose 28% in May on a year before in dollar terms, while imports grew at the fastest pace in more than a decade as the global economy powers back from the pandemic crisis, official data showed. Demand for China's goods has bounced after economically painful lockdowns last year due to the Covid-19 crisis, and as vaccines are rolled out across much of the world. Growth was boosted by last year's low base of comparison when the coronavirus was spreading rapidly. Exports from the world's second largest economy posted strong growth but came in lower than expectations of 32%. n May, import growth hit its highest rate since January 2011, coming in at 51% year-on-year in dollar terms, also slightly below expectations of a Bloomberg poll of analysts. China's overall trade surplus came in at USD45.53 billion in May, a year-on-year decrease of 27%.
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Japan's trade balance was in deficit in May, though narrowed from a year before, provisional data from the Ministry of Finance showed. Japan's trade deficit stood at JPY675.15 billion in May, narrowed from the JPY1.050 trillion deficit recorded in May 2020. The country's exports jumped by 52% to JPY3.519 trillion in May from JPY2.309 trillion the year before. Imports also rose, by 25%, at JPY4.194 trillion from JPY3.358 trillion a year ago.
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More than 4,000 pubs in Ireland are to reopen for outdoor service on Monday, which will see around 25,000 staff back to work. Many pubs have been booked out for the bank holiday weekend as Ireland enters its next phase in reopening society and the economy. For traditional pubs in Dublin, it will it will be the first time they have reopened since the start of the pandemic. Restaurants, beer gardens and cafes will be able to serve food and drinks outdoors, while gyms, swimming pools and leisure centres will reopen for individual training. Cinemas and theatres will reopen, while outdoor amusement and theme parks will also reopen to the public.
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BROKER RATING CHANGES
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MORGAN STANLEY ASSUMES NEXT WITH 'EQUAL-WEIGHT' ('UNDERWEIGHT') - TARGET 8,000 (5,300) PENCE
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LIBERUM RAISES TAYLOR WIMPEY TO 'BUY' ('HOLD')
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GOLDMAN SACHS INITIATES LEGAL & GENERAL WITH 'BUY' - TARGET 380 PENCE
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COMPANIES - FTSE 100
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Reckitt Benckiser said on Saturday it has agreed to sell its infant nutrition business in China to Beijing-based investment firm Primavera Capital Group for USD2.2 billion. The Slough, Berkshire-based consumer health and hygiene products company's disposal will include the manufacturing plants in Nijmegen in the Netherlands and Guangzhou, China, as well as a royalty-free perpetual and exclusive licence of the Mead Johnson and Enfa brands in China. Reckitt will continue to own the Mead Johnson and Enfa family of brands globally. Proceeds from the sale will go towards the reduction of net debt.
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Grocer Tesco said that it and French peer Carrefour have decided not to extend their purchasing alliance beyond the three years agreed back in 2018. "Over the last three years, Tesco and Carrefour have benefited from a number of joint buying opportunities across food and general merchandise categories, enabling access to new suppliers, new sources and new products. Moving forward, both companies have agreed that they will continue this work independently and focus on their own opportunities, building on the experience and the progress made during the alliance period," said Tesco. The alliance will run until the end of 2021 and then end.
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AstraZeneca said results from the head-to-head Elevate-RR phase three trial of Calquence showed non-inferior progression-free survival and statistically significantly fewer events of atrial fibrillation versus ibrutinib in adults with previously treated chronic lymphocytic leukaemia. Patients treated with Calquence had a statistically significantly lower incidence of all-grade atrial fibrillation compared with patients treated with ibrutinib, a key secondary endpoint, the pharmaceutical firm highlighted. Separately, updated results at four years of follow-up from the Elevate-TN phase three trial continued to show a strong progression-free survival benefit for Calquence as combination therapy or as monotherapy in previously untreated patients with chronic lymphocytic leukaemia, the most common type of leukemia in adults.
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COMPANIES - FTSE 250
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Germany-focused business park operator Sirius Real Estate reported a jump in full-year profit as it performed well during the pandemic. Pretax profit surged 48% year-on-year to EUR163.7 million, including EUR103.9 million of gains from property revaluations. Annualised rent roll rose 7.6% to EUR97.2 million, with the company noting the like-for-like increase of 5.2% marked the seventh consecutive year of growth exceeding the 5.0% mark. Sirius Real Estate's total dividend for the year was 3.80 cents, up 6.4% on the year before. "The comprehensive governmental response to the pandemic in Germany appears to have succeeded in maintaining employment and limiting the economic damage that many had predicted. Whilst there still remains some uncertainty as the roll out of vaccination programmes in Germany and across Europe continues, the company's performance over the last year gives reason for cautious optimism going forward," said Sirius Real Estate.
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COMPANIES - MAIN MARKET AND AIM
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Ad agency S4 Capital boosted its guidance after a strong start to 2021. The firm's executive chair, Martin Sorrell, said ahead of Monday's annual general meeting that trading in the first four months of the year has "accelerated strongly", with revenue up almost 90% versus a rise of 71% for the first quarter. Net revenue was up almost 84% compared with 71% for the first quarter. "We do not have our May figures as yet, but early indications are that May will be similar to April and that in June, the pipeline continues to be robust," the digital advertising and marketing services company said. In light of the pick-up in trade during the second quarter so far, S4 has raised its guidance for net revenue growth to 35% from 30% seen previously.
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Monday's Shareholder Meetings
Ocean Outdoor Ltd - AGM
S4 Capital PLC - AGM
UK Oil & Gas PLC - GM re authority to issue shares and dis-apply pre-emption rights
ZAIM Credit Systems PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
