Software firm surges as it reaps benefit of weak euro

German business software maker SAP SE became the latest European company to say it is benefitting more than anticipated from the euro’s slide.

Sales and operating profit this year will rise more than the company forecast just two months ago, SAP said in a regulatory filing yesterday, underscoring how a gain in the US dollar against the euro since the end of last year helps SAP when it converts overseas revenue to its home currency.

Revenue from software licences and cloud computing subscriptions this year will reap a currency benefit of about 11 percentage points if exchange rates remain at their March 6 levels, while operating profit will get a 14 percentage-point boost, Walldorf-based SAP said.

On January 20, SAP forecast improvements of 2 percentage points and 1 percentage point, respectively, using year-end rates as its basis.

Yesterday’s disclosure doesn’t affect SAP forecasts, but shows how the euro’s plunge to the lowest level in more than a decade is lifting revenue at European exporters. About 28% of SAP’s €17.6bn in sales last year came from the US. Since the end of 2014, the dollar has gained 12% against the euro.

For SAP, the benefit comes as sales and profit growth is tapering amid a shift from software that’s sold to be installed on customers’ computers -- for which SAP gets upfront payments - - to cloud-computing in which users pay subscriptions over time. Other suppliers of business software, including Oracle Corp. and Microsoft Corp., are undergoing similar transitions.

SAP isn’t alone among German companies in reaping benefits from the weaker euro. Siemens AG and Deutsche Post AG are also seeing the currency’s slide boosting sales.