January 13, 2011 10:18 pm

Strong fourth-quarter results boost SAP

SAP reported record fourth-quarter results that beat its own as well as market expectations, pushing up the shares of Europe’s biggest software group by sales.

The German group’s operating margin rose to 39 per cent in the last three months of the past year, higher than the 35.5 per cent reported in the fourth quarter of 2009. The news triggered a 3.5 per cent jump of SAP’s share price to €40.40 late on Thursday.

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The reaction came as relief to SAP’s management after several setbacks in the past few months. In November, the world’s largest business software maker by sales was forced to pay $1.3bn plus interest in damage claims in a copyright infringement verdict, which followed a lukewarm response to the group’s third-quarter results the month before.

Bill McDermott, SAP’s co-chief executive, said: “We are pleased to announce the best software sales quarter in the history of SAP. We achieved outstanding growth in all regions and customer segments.”

SAP said its full-year revenues rose by 17 per cent year on year to €12.45bn. Its full-year operating profit, reported in non-IFRS standards, came in at more than €3.9bn, pushing its operating margin from 27.4 per cent in 2009 to 31.5 per cent.

Revenue from software and software-related services, reported in non-IFRS standard and excluding currency effects, grew by 13 per cent, exceeding the group’s 9-11 per cent target.

SAP’s strong results reflected a boost in the software market in the past year as companies in emerging markets, the US and parts of Europe splashed out to underpin their economic recovery. It followed similarly upbeat results by Oracle, the group’s US-based arch-rival, in the past quarter.

“These are really good numbers,“ said Thomas Becker, analyst at Commerzbank.

SAP took some of the gloss of the results when it warned that the copyright infringement verdict in the US would have a “significant negative impact” on its – yet to be announced - operating result under IFRS.

Last November, Oracle successfully sued SAP for illegally downloading its software. The damage award from the court battle is eight times higher than the $160m provision that SAP had previously made in its balance sheet.

SAP has not yet made a decision whether it would appeal against the verdict. It said in November that it was “considering all options”.

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