German maker of business-management software, SAP, reports lower earnings for fourth quarter.
Image: SAP Annual Press Conference, Walldorf, Germany, on January 20, 2015: Luka Mucic (CFO of SAP SE), Bill McDermott (CEO of SAP SE), from left to right © SAP SE / Wolfram Scheible
In October 2014, SAP warned investors of a lower profit margin as it concentrated sales efforts on cloud based software which would see long-term profits instead of short-term for the fourth quarter. Today’s fourth quarter earning’s release saw a lowering of profit margin for 2017 from previous expectations of €22 billion with an operating margin of 35% and an operating profit of €7.7 billion, to now be in a range of €6.3 billion ($7.3 billion) to €7 billion on sales of €21 billion to €22 billion. Luka Mucic, CFO of SAP commented on future cloud scales, “We expect cloud subscriptions to exceed software license revenue in 2018. At that time SAP expects to reach a scale in its cloud business that will clear the way for accelerated operating profit expansion.”
Total revenue saw a rise of 7% from 2013 fourth quarter figure of €5,106 million to 2014 Q4 of €5,458 million.
Operating margin (%) was down 3.2 percentage points from 35.3% in 2013 Q4 to 32.1% in 2014 Q4
Basic earnings per share (€) was down €0.01 from €1.11 to €1.09
Full-year earnings showed better year-on-year revenue up by 4% from €16,815 million to €17,560 million, but with basic earnings per share down 2% from 2013 figure of €2.79 to €2.74 in 2014.
SAP shares fell at the opening of trade taking a tumble from the closing price of 57.485 to today’s low of 54.665, down nearly 5%. Trading stands at 54.940.
MT4 chart: SAP
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