James Mackenzie
FRANKFURT: Germany's SAP AG on Thursday posted first-quarter results which
broadly met market forecasts as strong consulting revenues helped offset a
bigger-than-expected fall in software license sales.
Europe's biggest software maker reiterated a full-year sales and margin
forecast it made in January but said market conditions remained
"challenging", echoing the downbeat tone heard across the sector in
recent weeks.
SAP said first-quarter sales rose nine per cent to 1.66 billion euros ($1.46
billion), as an 18 per cent rise in consulting revenues helped make up for a 12
per cent drop in software license revenues to 402 million euros.
"Conditions for software purchases are challenging, and while Europe
remains relatively strong, businesses in the Americas are taking a more
deliberate and measured approach to new software investments," SAP said in
a statement.
Operating profit before charges for stock-based compensation and acquisition
charges rose two per cent to 237 million euros, while net profit, adjusted for
the impact of SAP's loss-making US affiliate Commerce One and acquisition
charges, rose to 121 million euros from 117 million a year earlier.
A Reuters poll of 24 analysts forecast sales of 1.53-1.744 billion euros at
an average of 1.678 billion. Sales of software licenses were seen at 451 million
euros. Operating profit, including the cost of staff incentive programs and
acquisition costs, was forecast in a range of 157-274 million euros and at an
average of 202 million.
Europe leads revenue growth
SAP said revenues in the European region rose 11 per cent to 886 million
euros, while revenues in the Americas were up just five per cent in currency
adjusted terms at 587 million euros. Asian revenues rose four per cent to 185
million euros.
The company reiterated its forecast of a 15 per cent rise in 2002 sales with
operating margins of at least 21 per cent, saying it expected a much stronger
second half to the year.
SAP's comments match the gloom hanging over the rest of the sector following
a relentlessly downbeat string of results from some of the German group's main
US peers so far this month.
Late on Wednesday, Siebel Systems, the market leader in customer and sales
software, posted a bigger-than-expected fall in first-quarter sales, a day after
i2 Technologies, SAP's main rival in supply chain management software, posted a
$31.5 million first-quarter loss.
Despite some signs of economic revival in both the United States and Europe,
firms have been reluctant to splash out on big new IT systems, limiting spending
to projects promising an immediate return on investment.
SAP shares have dropped sharply amid a spate of profit warnings from rivals
in recent weeks, falling more than 10 per cent since the end of March.