 "SAP raises outlook, says trade uncertainties can help sales")
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 on Tuesday.
However, it edged up its 2017 sales and profit guidance and signalled slightly higher revenue ambitions by 2020.
"Geopolitical issues play right to our strengths," Chief Executive Bill McDermott told Reuters, noting that 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, 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 Trump's plans.
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Macroeconomic uncertainty over global trade issues has buoyed recent results, 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 per cent in the latest quarter in constant currency versus just 2 per cent in the United States, its largest national market.
SAP generates nearly a third of its revenue in the United States, while the EMEA region, which includes its home base of Germany, accounts for 44 per cent of turnover.
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 Trump would secure new bilateral trade deals to compensate for business lost as the United States retreats from global, multilateral trade pacts.
In one of his first actions as US president, Trump formally withdrew the United States from the Trans-Pacific Partnership trade deal on Monday.
CLOUD BUSINESS SHIFT
SAP's fourth-quarter operating profit, excluding special items, rose 4 percent to 2.37 billion euros ($2.55 billion), compared to estimates ranging from 2.28-2.60 billion euros in a Reuters poll of 21 analysts.
Marking progress moving its customer base to newer cloud-based internet platforms from classic packaged software products it has sold for decades, SAP said new cloud bookings jumped 40 per cent in the fourth quarter and the backlog for unbilled cloud services rose 47 per cent to 5.4 billion euros at year-end.
Finance chief Luka Mucic said sales of cloud-based internet software and services are poised to overtake sales of its classic packaged software in 2018.
SAP said it expects revenue for 2017 of 23.2 billion to 23.6 billion euros, a modest rise from the 23.0 billion to 23.5 billion euros it forecast a year ago for the current year and an increase of 6 per cent over 2016, based on the midpoint of the guidance.
These forecasts were shy of the mean 2017 revenue estimate of 23.65 billion euros, based on a Reuters poll of 20 analysts.
SAP said it expected 2017 operating profit of 6.8 billion to 7.0 billion euros in constant currencies, tightening its prior estimate of 6.7 billion to 7.0 billion euros. This would represent roughly a 4 per cent rise over 2016.
SAP raised its 2020 total revenue outlook to between 28 billion and 29 billion euros, from a range of 26 billion to 28 billion previously, while looking for operating profit at the high end of its prior outlook.
Shares in SAP were trading roughly flat at 83.27 euros by 1246 GMT, in line with Germany's blue-chip DAX index.