Shares in workspace company IWG have plunged by more than 31 per cent this morning, after the company warned profits would be lower than previously expected.
Operating profit for 2017 is now expected to be "materially below market expectations", in the range of £160m-£170m. The firm, which was previously known as Regus, said forecasts had changed because of planned investment in growing national networks and development capabilities, which should "establish a strong pipeline of growth in future years".
"In the short-term, however, this will lead to additional overhead costs and new centre losses due to the timing of openings. In addition, we have seen some weakness in London and disruption to other parts of our business globally from recent natural disasters," the company said.
IWG also said that the previously anticipated sales improvement in the third quarter from the increase experienced in sales activity was weaker than expected, which has resulted in a pause in the recovery of the mature business.
"Consequently, the year to date reduction in mature revenues to 30 September 2017 has remained similar to that of the first half, with a decline of 1.9 per cent at constant currency," the group said.
"This is disappointing, although the very strong uplift in sales activity so far in October, would suggest that this is in part potentially a timing issue.
"We also remain encouraged by the revenue growth across all our open centres (excluding closed centres) in the third quarter of 4.4 per cent at constant currency and the improving trends in sales activity, most notably in the fourth quarter to date."