SAP cuts jobs as profit tumbles

SAP is facing a tough year

SAP has announced 3,000 job cuts from its global workforce to prepare for a tough 2009 as it reported a two per cent drop in annual profit to €1.89bn (£1.75bn) from €1.92bn (£1.78bn) in the previous year.

The business software giant warned that 2009 first-half results would form a difficult comparison to the strong results reported in the first half of 2008, prior to the economic crisis.

"2008 can be described as a year having two completely opposite halves, where a strong first-half performance was greatly disrupted late in the third quarter by the beginning of the worst economic and financial crisis the world has witnessed in decades," said Henning Kagermann, co-chief executive of SAP.

Thanks to a number of measures, SAP managed to post a 13 per cent increase in year-on-year profit for the fourth quarter of 2008 to €850m (£791m).

During the period the firm said it would eliminate €200m (£186m) in costs by cutting back on travel and freezing hiring.

"When the crisis hit, we acted very quickly by taking the necessary steps to reduce costs. As a result, we were successful in exceeding our profitability targets," said Kagermann.

SAP forecast that its operating margin, excluding acquisition-related write-downs, will fall to between 24.5 per cent and 25.5 per cent this year from 28.2 per cent in 2008.

The company said that it will not forecast software and software-related service revenue for 2009, citing "the continued uncertainty surrounding the economic and business environment".