Strong growth in the US boosts SAP

SAP, the world’s biggest maker of business software, on Thursday said software sales rose 22 per cent in the first quarter, thanks to strong growth in the US and a solid performance in Germany.

However, shares in the German group dropped 2.3 per cent to €178.91 in early trade as profits disappointed investors.

SAP said software sales - a leading indicator for maintenance revenues - rose to €528m ($651m) from €434m a year earlier, driven by a 25 per cent increase in the US and an 8 per cent rise in its domestic market.

“We are pleased to say that we are off to a good start in 2006 with continued strong growth in software and product revenues for the first quarter,” said Henning Kagermann, chief executive.

SAP increased software sales in the Americas to 47 per cent as it won customers from US rival Oracle, which has been reorganising after embarking on a series of high-profile acquisitions last year.

SAP provides software that allows companies to manage payroll and inventory, while Oracle’s focus is mainly on databases.

Oracle last month reported only a moderate recovery in its core database software business in the latest quarter. However, sales of new applications software were stronger than expected.

SAP said total sales for the quarter, which includes maintenance and service revenue, rose 18 per cent to €2.04bn. Net income rose 11 per cent for the quarter to €282m from €254m a year before, but below analysts’ expectations.

SAP said it expected product sales to rise 13 to 15 per cent in 2006, based on 2006 software revenue growth of 15 to 17 per cent. The company expects its pro-forma operating margin to rise by 0.5 to 1.0 percentage points in 2006.

In the quarter the German group said it had won major contract deals from leading companies such as Honeywell International, Dow Chemical, Eon, the German utility, and Matsushita Electric, the electronics company.