SAP blames financial crisis as profit falls

Revenue rises 14 per cent but net income drops five per cent

SAP is preparing for a slowdown

SAP has reported third quarter profit down five per cent year on year to €388m (£311m), citing the “significant impact” of the global financial crisis.

Total revenue was up though, 14 per cent higher than the same period last year at €2.76bn (£2.2bn), while software and services sales grew 15 per cent to €1.99bn (£1.6bn). The latter figure is typically seen as an indicator of underlying growth as new application licence sales leads to further maintenance and support revenue in future.

“This was an achievement in a period where the global financial crisis had a significant impact on customer decisions towards quarter end,” said SAP co-chief executive Henning Kagermann.

“Customers are continuing to spend on our products, but the economic and business environment is uncertain. Our business model is flexible, and we are focusing on protecting our operating margins and earnings.”

The company decided to withdraw its sales forecast for the rest of its financial year in the light of the uncertainty created by the economic slowdown.

“We are assessing business activity continuously, and we are balancing the need for greater efficiencies with steady advancements in our products, customer services and technologies, while addressing customers’ most critical business issues,” said Kagermann.

“This approach has worked well for customers and SAP throughout the up and down economic cycles of the past. We’ve been through uncertainty before, and have always emerged as a better, stronger and more efficient company.”