Strong euro puts dampener on SAP quarter

SAP has said its third quarter results could have been stronger, but were held back by a strong euro.

The German software maker said the significant rise of the euro against the yen and dollar during its third-quarter period affected revenue and profits.

Despite this, the vendor posted solid results in comparison to the same quarter last year, with third-quarter revenue of €2.4 billion (£1.7 billion) up nine per cent to 30 September, the last day reported for the period.

Net profit was also up 10 per cent to €408 million (£284.4 million) in the face of 13 per cent rise in the euro against the dollar over the year to 30 September. On that day in 2006 the euro-dollar exchange rate was $1.27, but had hit $1.43 by the last day of SAP's reporting period.

SAP said revenue would have grown a full four per cent more at adjusted constant currency rates, while profit would have been up 14 per cent instead of the reported nine per cent.

However the vendor's executives were positive about overall performance, as it also announced results for the last nine months. It said it remains on track to post increased annual growth rates of around 14 per cent over last year's 12 per cent.

Software licence revenue grew 11 per cent on last year's quarter to €715 million, although this was down on this year's previous quarter growth of 18 per cent.

And software and services revenue for the last nine months compared to the same period last year including maintenance income was €1.74 billion, up 13 per cent from the year before.

Henning Kagermann, SAP chief executive said the company had had "another strong quarter, in which we continued to report double-digit growth in software and software-related service revenues in each region and additional share gains among core enterprise application vendors."

He added: "The third quarter also showed excellent results on the product side," referencing increased customer install bases for the SAP business process platform, NetWeaver and its core enterprise resource planning (ERP) software product, as well as the launch of its software-as-a-service (SaaS) offering, Business ByDesign, which went live with 20 customers.

But the company is also currently defending itself in a lawsuit brought by bitter rival, Oracle that alleges its US support subsidiary TomorrowNow gained unauthorised access to its product information for competitive advantage.

And only last week the German software giant broke from its traditional, organic growth strategy, announcing its intention to buy business intelligence vendor Business Objects for $6.8 billion (£3.3 billion) - its biggest ever acquisition.

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