BERLIN: Business software group SAP forecast flat revenue and a decline in operating profit in 2021 after reporting fourth quarter results that beat market expectations, sending its shares up in early trading on Friday.
Giving an early view of 2020 results and setting 2021 guidance, SAP said adjusted revenue, at constant currency, would be unchanged to up 2 percent this year, while adjusted operating profit was seen falling by 1 percent to 6 percent.
“This update should trigger a modest relief rally,” said Citi analyst Amit Harchandani, adding, however, that the overall level of near-term uncertainty meant he would keep his neutral rating on the stock.
CEO Christian Klein abandoned his medium-term profit targets last October and said SAP would go all-in on its shift to cloud computing, cautioning that business would take longer than expected to recover from the coronavirus pandemic.
That announcement, which came with a third quarter earnings miss, sparked the biggest drop in SAP shares in a generation, causing the leading provider of enterprise software to lose its mantle as Europe’s most valuable technology company.
SAP’s 2020 revenue exceeded its lowered guidance, while profit hit the high end, the company said in a news release issued ahead of results scheduled on Jan. 29.
“Our strong finish to the year and the upcoming launch of our new holistic business transformation offering position us well to meet our new outlook targets,” Klein said in a news release that followed SAP’s late night results release.
The company plans a kickoff event, called SAP Rise, on Jan. 27 to promote its cloud drive.
SAP shares have lost more than a quarter in value since their all-time high set last September, valuing the Walldorf-based company at $156 billion.
Chief Financial Officer Luka Mucic highlighted SAP’s record cash flow generation in 2020 which, at €7 billion, was double a year earlier.
Cloud revenue continued to be impacted by lower pay-as-you-go transactional revenue, however, in particular for Concur, SAP’s expense management app that has been hit by a slump in corporate travel.
That was offset by strength in e-commerce, business technology platform and customer experience sales, as well as wins for SAP’s human resources application SuccessFactors.
“SAP also saw strong early take up of its new holistic business transformation offering among pilot customers, contributing to the cloud performance in the quarter,” the company said.
SAP says its switch to subscription-based cloud services will boost growth and profit margins in the long term, but weaning itself off the upfront fees that its legacy software licenses throw off will create near-term headwinds.
Non-IFRS cloud revenue at constant currencies rose by 13 percent in the fourth quarter, while current cloud backlog — the company’s preferred indicator of sales performance — grew by 14 percent, also at constant currencies.
Quarterly operating profit was lifted by lower share-based compensation expenses, rising 3 percent at constant currency. Adjusted operating margin, also at constant currency, expanded by 1.5 percentage points to 36.8 percent.
SAP sees flat 2021 revenue after Q4 results beat market expectations
https://arab.news/6x382
SAP sees flat 2021 revenue after Q4 results beat market expectations
Closing Bell: Saudi main index slips to close at 10,588
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Sunday, losing 127.15 points, or 1.19 percent, to close at 10,588.83.
The total trading turnover of the benchmark index was SR2.57 billion ($685 million), as 28 of the stocks advanced and 232 retreated.
Similarly, the Kingdom’s parallel market Nomu lost 108.53 points, or 0.46 percent, to close at 23,719.13. This comes as 22 of the stocks advanced while 47 retreated.
The MSCI Tadawul Index lost 17.17 points, or 1.22 percent, to close at 1,393.34.
The best-performing stock of the day was Sport Clubs Co., whose share price surged 3.69 percent to SR9.00.
Other top performers included Flynas Co., whose share price rose 2.55 percent to SR72.30, as well as National Industrialization Co., whose share price surged 2.13 percent to SR10.09.
Consolidated Grunenfelder Saady Holding Co. recorded the most significant drop, falling 6.61 percent to SR8.90.
Sustained Infrastructure Holding Co. also saw its stock prices fall 5.75 percent to SR30.82.
CHUBB Arabia Cooperative Insurance Co. also saw its stock prices decline 5.72 percent to SR22.40.
On the announcements front, Wataniya Insurance Co. said it has received a notice of award for a one-year contract with Saudi National Bank to provide general insurance as well as protection and savings insurance services, in line with agreed terms and conditions.
According to a Tadawul statement, coverage will begin on Jan. 1, 2026. The contract value exceeds 15 percent of the company’s total revenues, based on its latest audited financial statements for 2024.
Wataniya Insurance Co. ended the session at SR14.35, up 1.92 percent.
Fawaz Abdulaziz Alhokair Co., or Cenomi Retail, has announced executing a SR1.5 billion facility agreement structured as a short-term loan with Emirates NBD – Kingdom of Saudi Arabia. A bourse filing revealed that the financing duration is three years with an option to extend for a total of two years.
Cenomi Retail ended the session at SR20.00, up 0.26 percent.
First Milling Co. has announced the Board of Directors’ recommendation to amend the firm’s bylaws Article “Company Management” to increase the number of board members from seven to eight. This change reflects the firm’s commitment to broadening the range of expertise and skills on its board, in line with its growth and expansion plans for the next phase.
The company reiterated its commitment to fulfilling all necessary procedures and obtaining approvals from the relevant authorities. The recommendation will be submitted to the upcoming General Assembly, with the date to be announced in due course.
First Milling Co. ended the session at SR49.22, down 1.06 percent.
