SAP suffers surprise profit slump

Accountancy and business software provider, SAP, has seen its quarter one operating profits slump by 8%.

The IT company saw its revenue drop by 33% and net income by 16% to €204m, surprising analysts who had expected the businesses to show an increase in operating profit of 20%.

The German company saw total revenues for US GAAP software and software related services fall by 3% from €2.46bn to €2.40bn, with non GAAP revenues falling 4% from €2.51bn to €2.41bn. Earnings before interest and taxes stood at Euros 332m (£293.6m).

A statement by the company said: 'The decrease is the result of the difficult operating environment worldwide due to the global economic downturn, and the tough comparison to the first quarter of 2008, which was prior to the economic crisis that disrupted the global markets in the third quarter of 2008 and also included the effects from the acquisition of Business Objects.'

'While visibility for software revenues remains limited, we continue to take the necessary steps to protect our margin in this tough operating environment,' said Léo Apotheker, co-CEO of SAP

'The cost containment measures that we initiated in October of last year and carried into the first quarter of 2009 have really taken hold, and we are pleased with the resulting margin performance' he added.

SAP reduced costs across the company in October as sales dropped sharply including reducing its workforce from 48,500 to 51,800.

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