Technology SAP management duo raises the targets for 2020 -...

SAP management duo raises the targets for 2020 – the flash analysis


  • The cloud business grew by 39 percent in 2019 to 6.93 billion euros, also thanks to the takeover of market research specialist Qualtrics. It was a key driver of sales, increasing 12 percent to 27.63 billion.
  • Operating profit fell 21 percent to EUR 4.50 billion. The costs of the acquisition, a restructuring program and the share-based payments were expensive for the group. Adjusted, the key figure grew by 15 percent to 8.21 billion euros.
  • SAP continued to increase profitability, the adjusted operating margin was 29.7 percent, 0.7 percentage points more than in the previous year. By the end of 2023, the software manufacturer wants to improve to 34 percent.
  • SAP has slightly raised its forecast for the current year – which analysts have already anticipated in their estimates.

That stands out positively

The strategic realignment is having an effect. SAP’s cloud business continues to grow strongly. It has long contributed significantly more sales than traditional license sales – this is reasonably stable for the German software manufacturer with a minus of two percent to 4.53 billion euros compared to competitors like Oracle.

Takeovers play an important role in this, as the example of Qualtrics shows: For the first time since the takeover, SAP has made the business figures of the market research specialist public – through a restructuring, it now has its own segment. Since the deal was closed at the end of January, he has generated 508 million euros in sales and eight million euros in profit. The company, for which the group spent $ 8 billion, continues to grow rapidly.

Business is also running for the most important product S / 4 Hana: 1200 customers signed up for the program package for controlling business processes, including well-known names Ford, Eon and Zalando. Just as important: More and more companies are now using the system, including Deutsche Telekom and BDO. This is a sign that acceptance in the market is increasing – there have been doubts about this so far.

For shareholders and analysts, the profitability of SAP has come into focus in recent years: after the high investments in recent years, they want to see results. The efficiency program that management announced in April 2019 is having an impact. The operating margin rose 0.7 percentage points to 29.7 percent. CFO Luka Mucic emphasized that the group was slightly above the internal forecasts.

This is noticeable

High extraordinary costs were incurred in 2019. The acquisition of Qualtrics contributed 689 million euros, the restructuring with 1.13 billion euros. In addition, the share-based payments for employees cost 1.82 billion euros – no wonder: the share price reached a record high in 2019. However, the effects on the operating result were largely known.

The business figures do not contain any nasty surprises. At best, shareholders could take a critical view that SAP’s cloud business is slightly below analysts’ expectations. But the results are not enough to give the share price an impulse, wrote the analyst Knut Woller from Baader Bank in a first analysis – SAP is already close to the all-time high. In a difficult market environment, the share price was around two percent in the red.

It continues like this

SAP has slightly raised its targets for the current year. Based on constant exchange rates, the operating result is expected to reach between 8.9 and 9.3 billion euros, thus extending the forecast range by 200 million euros. He has “big expectations” for improving profitability, said CFO Mucic.

Shareholders are eagerly awaiting what the group is proposing for a dividend. In 2019 it was EUR 1.50 per share, Mucic announced an increase. In addition, there will be a special distribution in the amount of 1.5 billion euros, which is planned in the form of share buybacks or special dividends. In total, the shareholders are likely to receive more than three billion euros.

More: The new co-bosses Christian Klein and Jennifer Morgan are setting the tone for SAP. The big challenges, such as reorganizing the corporate structure, are still pending.



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