ZCZC
BCN-21
GERMANY-SOFTWARE-EARNINGS
Investors hail more optimistic SAP
FRANKFURT AM MAIN, April 24, 2019 (BSS/AFP) – Shares in German software
and cloud computing giant SAP surged Wednesday on an optimistic outlook and
soaring first-quarter revenues and profits, as the group gets a year of
restructuring and job cuts underway.
The group’s stock added 6.5 percent to trade at 108.42 ($121.60) euros
around 9:25 am in Frankfurt (0725 GMT), making it the second-best performer
on the DAX index of blue-chip firms.
Earlier Wednesday, SAP had reported net profits up 25 percent year-on-year
between January and March, to 1.1 billion euros — measured using non-IFRS
standards, which exclude some costs.
In IFRS terms, the group made a loss of 108 million euros in the first
three months, as costs related to a planned restructuring and the recent
acquisition of California-based Qualtrics hit the books.
Executives said in January they would spend up to 950 million euros this
year on the reorganisation, which will see 4,400 jobs go mostly at the
Walldorf-based group’s German and US operations.
By next year, bosses hope to achieve annual cost savings of 800 million
euros.
“We are focused on leading a best-run SAP so we can drive a significant
margin expansion in the quarters ahead,” chief executive Bill McDermott said
in a statement.
Also in non-IFRS terms, operating, or underlying profit added 19 percent,
to almost 1.5 billion euros, while revenues grew 16 percent to 6.1 billion.
SAP said revenue from its cloud computing business grew 48 percent year-
on-year, to 1.6 billion euros, although its traditional software business
remained its biggest earner with 3.5 billion euros — up six percent.
Looking ahead to the whole year, SAP lifted its forecast for non-IFRS
operating profit, saying it expected year-on-year growth of up to 12.5
percent — one point higher than previously predicted — to as much as 8.05
billion euros.
BSS/AFP/HR/1350