23 January 2002 Enterprise resource planning (ERP) software giant SAP has reported healthy fourth-quarter net income and surprised analysts by delivering a bullish sales forecast for 2002.
The Walldorf, Germany-based software vendor predicted that revenues would grow by about 15% for the full year and that operating margins would improve marginally to 21%. The company said that the bulk of the growth would come in the second half of 2002, buoyed by strong licence sales. CEO Hasso Plattner also promised on-going cost-cutting measures throughout the year.
The upbeat forecast followed a strong fourth quarter for the company, during which net profit adjusted for costs rose slightly to €379 million from €375 million – above analysts’ expectations of €349 million – and revenues grew 7% to €2.32 billion from €2.29 billion in the same period a year earlier.
For the full year, revenues rose 17% to €7.34 billion, compared to the €6.27 billion achieved in 2000.
SAP’s software products serve a variety of markets and all sectors offered reasons for optimism during the quarter.
In particular, sales of supply chain management and customer relationship management (CRM) products did well. The former, which manage purchasing and control inventory, generated €232 million, or 23% of total software sales, while CRM generated €196 million (19%).
However, poor licence sales provided something of a blip, falling 2% to €1.03 billion. New license sales provide a key indicator of a software company’s underlying future growth.
A further source of discomfort for SAP executives was the increasingly problematic partnership with business-to-business software vendor Commerce One, in which it has a 20% stake. Its widening losses forced SAP to take a charge of €163 million in 2001.