International Workplace Group (LSE:IWG) shares fell sharply on Tuesday despite the flexible-workspace operator reaffirming its full-year and medium-term outlook, as investors focused on weak first-half cash generation and the potential impact of recently introduced cost reductions.
IWG shares were down 5.17% at 175.90 pence after the company reported cash flow before corporate activities of negative $55 million for the first half.
The group expects overhead costs to fall significantly during the second half, with cost-cutting measures introduced in response to a more uncertain macroeconomic environment expected to make a greater contribution to performance through the remainder of 2026 and into subsequent periods.
Management also maintained its medium-term targets, indicating that it continues to see its broader strategy progressing despite geopolitical tensions and wider economic uncertainty.
IWG had previously outlined steps to control costs as it navigates the more challenging backdrop while continuing to expand its flexible-workspace operations.
At its first-quarter trading update, the company reported accelerating centre signings and openings, increased enquiries from enterprise customers, higher sales and positive pricing trends.
The group continues to expect adjusted EBITDA of between $585 million and $625 million for 2026. It is also targeting growth of at least 4% in company-owned revenue and recurring management-fee income of $80 million.
Over the medium term, IWG is aiming to generate at least $1 billion of adjusted EBITDA while retaining its investment-grade credit rating.
Cost reductions become a key focus for IWG
The share-price decline suggests investors are placing particular emphasis on cash generation despite management maintaining its earnings targets.
The expected reduction in overheads could become increasingly important during the second half if IWG is to improve cash performance while continuing to invest in expanding its network.
The company has been shifting towards a more capital-light growth model, with recurring management fees forming a larger part of its strategy alongside expansion of its flexible-workspace footprint.
Cost discipline, improving profitability and stronger cash conversion are therefore likely to remain important measures of progress as IWG works towards its medium-term financial objectives.
More about International Workplace Group
International Workplace Group is a global provider of flexible offices, coworking spaces and workplace solutions.
The company operates brands including Regus and Spaces and is expanding its network while pursuing a more capital-light business model.
Its strategy combines new centre growth, recurring management-fee income and tighter cost management as the group seeks to improve profitability and progress towards its medium-term earnings targets.
International Workplace Group shares trade on the London Stock Exchange under the symbol IWG.
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