Company boss McDermott is satisfied: SAP has “met or exceeded all forecasts”. The software company looks to the future and plans to move many employees to farewell. Nevertheless, the annual balance sheet of the Dax Group is not enthusiastic.
The software giant SAP has achieved its goals in the past year and is now committed to a restructuring program. Employees will be offered early retirement, announced company boss Bill McDermott at the presentation of the annual balance sheet. SAP is in a “fast moving industry”. Overall, the Walldorf want to take up to 950 million euros in the hand to make employees say goodbye. At the end of 2018, SAP had almost 96,500 employees. Despite the measures, the group intends to reach more than 100,000 by the end of 2019.
The Dax Group had “met or exceeded all forecasts,” said chief executive McDermott. Annual sales climbed 11 percent in currency-adjusted terms to 25.96 billion euros – in October, SAP had promised revenues of at least 25.2 billion euros. The operating result grew by ten percent to 7.48 billion euros, here, the company had targeted at least 7.425 billion euros.
In the fourth quarter, the new cloud bookings, which are crucial for the future business, lost momentum. Adjusted for currency effects, they rose only 23 percent after having been up 37 percent in the previous quarter. “Fluctuation is absolutely normal,” said CFO Luka Mucic. Investors were disappointed with the balance sheet figures. At the start of trading, the shares of the group slipped by 2.2 percent, making it one of the biggest losers in the Dax.
The rapidly growing cloud business is undergoing a transformation in which it is still unclear who will ultimately be in the lead. Among other things, SAP competes with the US companies Salesforce, Oracle and Workday, which like the Germans invest heavily. Just last week, SAP closed its $ 8 billion acquisition of US firm Qualtrics in November.
Operating margin down
McDermott was also in the face of the acquisitions wont be sure of victory: “We will win.” In the current year, the operating result should increase by a maximum of 11.5 percent to eight billion euros. SAP does not want to give a look at the sales, but it should grow “slightly lower” than the operating result.
With digitization and maintenance options increasing, more and more companies are turning down expensive software licenses. Instead, they buy more flexible web subscriptions, which are usually paid on a monthly basis rather than once. This, as well as the high level of investment, has burdened the operating margin at SAP for many quarters. In the fourth quarter, this key figure, which attracted much attention, especially on the stock market, fell to 33.2 percent after 34.7 percent in the same period of the previous year. For the entire year, it was 28.8 percent. Mucic had actually targeted 29.8 percent and now promised that the turnaround has been initiated.