SAP predicts Donald Trump boost

SAP, Europe’s most valuable technology firm, raised its outlook slightly for the next four years, saying challenges to global trade presented by Donald Trump’s new US administration would drive sales of its business planning tools.

The German software company, which counts many of the world’s biggest multinational companies among its customers, reported 2016 results on the lower side of analysts’ expectations yesterday.

However, it edged up its 2017 sales and profit guidance and signaled slightly higher revenue ambitions by 2020.

“Geopolitical issues play right to our strengths,” chief executive Bill McDermott said, noting the company’s products help customers adapt to changing business trends. “It is counter- intuitive, but that is the way it works with SAP.”

The software maker specialises in applications used in business planning, ranging from accounting to human resources to supply-chain and travel and expense management corporate tools.

As a New York native at the helm of a German software maker, Mr McDermott said it was too early to say what impact the new administration’s “America First” policy may have on trade but that he was “less pessimistic than most” about president Trump’s plans.

Macroeconomic uncertainty over global trade issues has buoyed recent results, Mr McDermott said, noting that Britain was one of SAP’s strongest European markets in the post-Brexit period.

Sales in Europe, the Middle East and Africa grew 8% in the latest quarter in constant currency compared with just 2% in the US, its largest national market.

SAP generates nearly a third of its revenue in the US, while the Emea region, which includes its home base of Germany, accounts for 44% of turnover.

Mr McDermott attributed weakness in the company’s US business to a slowdown in government spending during and after the presidential election campaign, but said its public-sector business was likely to pick up again once Congress sets new spending plans in coming months.

He expressed confidence that president Trump would secure new bilateral trade deals to compensate for business lost as the US retreats from global, multilateral trade pacts.

SAP’s fourth-quarter operating profit, excluding special items, rose 4% to €2.37bn. Its shares were little changed in Frankfurt trade.