Workspace Group Shares Plunge 13% on Profit Warning and Dividend Cut
Flexible office landlord Workspace Group has issued a stark warning over a "substantial" hit to profits in the coming financial year, citing rising costs and declining rental income. The FTSE 250 company saw its shares slump by 13% in morning trading on Friday 17 April 2026 as investors reacted to the gloomy forecast.
Financial Outlook Deteriorates Amid Economic Uncertainty
The group announced that results for the year ending March 2027 will be significantly impacted by lower rents and occupancy rates, compounded by wider economic uncertainty. Additionally, rising debt and energy costs are putting further pressure on the business. While trading profits for the past year to March are expected to align with market expectations, Workspace is bracing for what it describes as a "substantial step down" in earnings for 2026-27.
In response to the anticipated profit decline, the company is cutting its dividend to ensure it remains fully covered by earnings, aiming to return cover to 1.2 times earnings. This move reflects a cautious approach to capital allocation during a challenging period.
Strategic Repositioning Under New Leadership
New chief executive Charlie Green, who assumed the top role in February, is spearheading a strategic shift to reposition Workspace as a budget office space provider targeting London start-ups and small businesses. However, he acknowledged that this transition will negatively affect short-term profitability.
"It will take time to deliver on our ambitions and, as we deliberately reposition the business, there will be a step down in profitability," Mr Green stated. "To reflect this, and a disciplined approach to capital allocation, the board has also reviewed our dividend policy."
The group plans to invest in its portfolio as part of this strategy overhaul. Mr Green elaborated on the vision, saying, "The opportunity moving forward is to reposition and elevate our offering so that we fully address the changing needs of our customers. In doing so, we will own the value category and be the first-choice provider of space for the start-up, SME and scale-up market."
Financing the Transition
Workspace will also ramp up sales of parts of its business to help finance the strategic changes. This initiative is in addition to a previously-announced £200 million disposal programme. The company aims to accelerate its strategy over time, with the goal of delivering sustainable earnings growth in the future.
"There is considerable work to be done and we can see a clear path to accelerating our strategy and, in time, delivering sustainable earnings growth," Mr Green added, highlighting the long-term focus despite immediate financial headwinds.
