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SAP beats forecast as Q1 earnings surge

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CIOL Bureau
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By James Mackenzie



FRANKFURT: SAP AG on Thursday posted stronger-than-expected first quarter results and said it was optimistic about prospects for the next two quarters, shrugging off gloom hanging over the software sector. "Despite the difficult market environment, SAP is optimistic about the first three quarters of 2001," the company said in a statement.



Kicking off the reporting season for European software companies, SAP said sales growth in the first nine months would exceed the 23 per cent seen in full year 2000, while operating margins would grow by one or two percentage points above the 14 per cent seen in the first nine months of 2000.



The forecast, which follows downbeat statements about prospects for the second quarter from US rivals Siebel Systems and i2 Technologies, contrasts strongly with the gloom emerging from US software houses which have been hit by slowing spending by corporate IT departments. SAP stock traded on Instinet at 159 euros after the news, up 3.2 per cent on Wednesday's close.



Europe's largest software company posted an 82 per cent rise in operating profit before charges for its staff benefits programs to 233 million euros ($204.6 million). The rise came on top of a weak first quarter last year but was well ahead of expectations of about 152 million euros.



Net profit more than doubled to 117 million euros, while earnings per share rose to 0.36 euros from 0.18 euros and compared with analysts' forecasts of 0.25 euros. Sales were up 29 per cent at 1.52 billion euros, also ahead of expectations. A Reuters poll of 16 analysts showed forecasts for first quarter sales ranging between 1.293 billion and 1.48 billion euros at an average of 1.426 billion.



Slowdown fears


Analysts had been awaiting SAP's outlook with more than the usual interest amid signs that the slowdown in software spending which has hit U.S. companies may be crossing the Atlantic.



A number of SAP's US rivals in the web-based business-to-business segment, including Oracle Corp, Ariba Inc and i2 Technologies have warned results were being hit by faltering economic growth in the United States. SAP's own US business grew slightly more slowly than in the European region and were boosted by exchange rate effects.



Sales in the American region rose 26 per cent to 550 million euros, compared with a 31 per cent rise to 796 million euros in Europe, the Middle East and Africa. Excluding exchange rate effects, American sales were up 20 per cent. New license sales rose by 24 per cent to 458 million euros, again beating analysts' forecasts, which predicted license sales of about 439.5 million euros.



(C) Reuters Limited 2001.

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