SAP warns: Americas slowed our 2016 start

Europe's software giant behind year goal

Europe’s largest software company has warned its first-quarter results could be weaker than expected, thanks to a slow start in the Americas.

SAP announced preliminary first-quarter revenue results on Friday showing continued growth in cloud but a drop in new licences for on-premises software.

New software licences for its core software dropped 13 per cent to €0.61bn while cloud bookings increased 22 per cent to €0.14bn.

IFRS profits were up 28 per cent to €0.81bn while total revenue was €4.73bn, an increase of five per cent. Earnings per share increased 37 per cent to €0.48.

SAP reckoned its 2016 had got off to a slower start than anticipated. The cause, is the Americas.

The company is reported to have blamed its tardiness in North America on the fact the region had done so well during the fourth quarter of last year and on “political and macroeconomic instability” in Latin America “particularly Brazil”. Also, deals expected to be signed in the first quarter had slipped into the second quarter.

Chief executive Bill McDermott, however, said he had “perfect, clear confidence” SAP could meet the full-year profit targets announced in January.

The firm expects non-IFRS operating profit to be in a range of €6.4bn – €6.7bn under constant currencies – versus €6.35bn in 2015. ®

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