Market now too tough for SAP to make sales predictions

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In a further sign of the worsening economic climate, SAP has abandoned its 2002 sales forecast, arguing that it cannot give clear guidance in the current market conditions..

SAP had previously forecast 5 to 10 per cent growth in 2002 sales, but said it could no longer provide a forecast. The company emphasised that it still expects to report an operating profit margin of at least 21 per cent even if full year sales remain flat compared with last year.

"The sales pipeline remains strong and the company expects that it will continue to gain market share," said an SAP spokesman. "On the other hand, the overall political and economic environment is currently unpredictable and it is difficult to forecast revenues," it said.

The company broke the news as it released its third quarter results which saw operating profit before expenses for stock-related employee compensation and acquisition costs climb to 316 million euros from 201 million a year earlier.

Sales were in line with expectations at 1.7 billion euros from 1.65 billion a year earlier, but licence sales – which typically indicate the real underlying growth pattern – slipped to 435 million euros from 447 million in the comparable quarter last year.

There was some good news in so far as the company put the brakes on the slowdown in business in the US in the second quarter, with software sales rising 4 per cent to 104 million euros in that region. In contrast, licence sales in the Europe, Middle East and Africa (EMEA) region were down by one per cent, although the home market of Germany climbed nine per cent to 93 million euros.

Overall revenues in EMEA rose 10 per cent at constant currency rates to 913 million euros, while sales in the Americas region were up 11 per cent at 586 million euros, though without the exchange rate adjustment, sales in the region were down by four percent.

The company said it had brought costs down by eight percent in the third quarter to 1.366 billion euros by cutting its sales, administration and research budgets. SAP also said it planned to buy back 100 million euros in stock over the next few months after it has already bought back 250 million euros worth of shares in 2002.

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