SAP cuts outlook despite profit rise in Q3

FRANKFURT: SAP, the German software giant, said Monday it was trimming its profit forecast for the whole of 2014, despite a strong rise in revenues and profits in the third quarter.

SAP said in a statement it expects full-year operating profit to be in a range of €5.6-5.8 billion ($7.1-7.4 billion, Dh26-27 billion), lower than its previous forecast of €5.8-6.0 billion.

SAP attributed the downgrade to “less upfront revenues” and short-term pressures on margins as it refocuses its business on cloud-based software technology.

In the three months to September, net profit rose by 16 per cent to €881 million euros, SAP said, beating analysts’ expectations.

Third-quarter revenues rose by 5.0 per cent to €4.25 billion, driven by a 45-per cent increase in revenues from cloud subscriptions and support.

In recent years, SAP has actively shifted its business focus away from on-site software to cloud-based products, which deliver software online to business customers.