SAP Sets Up a Record With Operating Income

January 22, 2004 by admin

Operating income was a record Euro 1.7 billion (2002: Euro 1.6 billion), which was an increase of 6 per cent compared to last year. Pro forma operating income was Euro 1.9 billion (2002: Euro 1.7 billion), representing an increase of 12 per cent from 2002. Net income was a record Euro 1.1 billion (2002: Euro 509 million), or Euro 3.48 per share (2002: Euro 1.63 per share), and pro forma net income was Euro 1.2 billion (2002: Euro 964 million), or pro forma Euro 3.84 per share (2002: Euro 3.08 per share). Full year 2002 net income and earnings per share were impacted by impairment charges related to the Commerce One write down of Euro 297 million. The operating margin was 25 per cent, which was up three percentage points year-over-year. The pro forma operating margin was 27 per cent, which represented an increase of 4 percentage points compared to 2002.
Software revenues were Euro 2.1 billion (2002: Euro 2.3 billion), representing a decrease of 6 per cent compared to 2002. At constant currency, software revenues increased one per cent year-over-year. Once again, SAP gained significant share against its four largest competitors. On a rolling four quarter basis, the Company’s worldwide share of the market against its four largest competitors based on software revenues was 59 per cent at the end of the fourth quarter of 2003 compared to 58 per cent at the end of the third quarter of 2003 and 51 per cent at the end of the fourth quarter of 2002. SAP’s U.S. organization achieved a strong turnaround in 2003 with substantial increases in both software revenues and profitability compared to 2002. Software revenues in U.S. dollars increased by 23 per cent year-over-year. The Company now considers itself to be the largest CRM application software vendor when measuring its CRM software revenues against its competitors on a rolling four quarter basis. Total revenues were Euro 7.0 billion (2002: Euro 7.4 billion), down 5 per cent compared to 2003. At constant currency, total revenues increased 3 per cent compared to 2002.

A challenging but excellent year

Net income was Euro 423 million (2002: Euro 474 million), or Euro 1.36 per share (2002: Euro 1.52 per share), and pro forma net income was Euro 481 (2002: Euro 493), or Euro 1.55 per share (2002: Euro 1.58 per share). Software revenues were Euro 931 million (2002: Euro 958 million), down 3 per cent from the same period last year but increased by 3.5 per cent at constant currency. Total revenues were Euro 2.2 billion (2002: Euro 2.3 billion), representing a decrease of 3 per cent compared to the same period last year but increased by 4 per cent at constant currency.
“2003 was a challenging but excellent year for SAP, as we reported record operating income, earnings per share, margin growth and gains in share against our next four largest competitors,” said Henning Kagermann, Chief Executive Officer of SAP. “Additionally, both software and total revenues grew year-over-year on a constant currency basis, outperforming our competitors.”

Growth opportunities for 2004

Software revenues are expected to increase by around 10 per cent compared to 2003. The pro forma operating margin, which excludes stock-based compensation and acquisition-related charges, is expected to increase by around one percentage point compared to 2003. Pro forma earnings per share, which excludes stock-based compensation, acquisition-related charges and impairment-related charges, are expected to be in the range of Euro 4.20 to Euro 4.30 per share. The outlook is based on an assumed U.S. Dollar to Euro exchange rate of $1.25 per Euro 1.00.
Mr. Kagermann continued, “Our more closely aligned development and field organizations, the success of launches like SAP NetWeaver and our undisputed industry leadership with our innovative product offerings have prepared us well for 2004. We believe 2004 will demonstrate the continuation of a trend that we saw evolve in the second half of 2003: clear signs that companies started picking up the pace of their software investments. Our pipeline is strong, and with our unmatched product portfolio and an expected rebound in the economy in the second half of 2004, our sales, marketing and R&D efforts will be focused on the growth opportunities we see for 2004.”

Source: SAP AG

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