SAP is coming to the Big Board!
Tuesday January 27, 7:16 am Eastern Time
Company Press Release
SAP AG 1997 Sales Rise 62% to DM 6.02 Billion ($3.36 Billion)
ADRS to List on NYSE
Market Lead Lengthens
WALLDORF, Germany--(BUSINESS WIRE)--January 27, 1998--SAP AG, the world's leading provider of enterprise application software, today announced its preliminary results for 1997. Sales grew by 62% to DM 6.02 billion ($3.36 billion), further strengthening SAP's leading position in enterprise software solutions. Based on preliminary figures for 1997, earnings per share rose 62% to DM 8.86 ($4.94) (1996: DM 5.48). SAP's Executive Board forecasts sales growth of 30-35% in fiscal 1998. The company expects to list its ADRs on the world's largest stock market, the New York Stock Exchange (NYSE), in the third quarter of this year.
Growth was fueled by sustained underlying demand for enterprise-wide packaged application software, with fourth-quarter revenues increasing 63% to DM 2.20 billion ($1.23 billion). European monetary union and year 2000 issues have further driven sales. ''Our strict focus on client-driven products and our continuing innovations are attracting companies of all sizes to SAP's scalable business process solutions,'' said Dietmar Hopp, Co-Chairman and CEO.
Income before taxes rose 72% to DM 1.67 billion ($932 million), while costs grew 57% to DM 4.49 billion ($2.51 billion). Net profits for the year climbed 63% to DM 924 million ($516 million); the total tax rate grew from 41.3% to 44.5%. Earnings per share increased 62% to DM 8.86 per share, on an increased number of shares outstanding (1997: 104.3 million; 1996: 103.5 million).
The strength of the US dollar and other key currencies relative to the deutsche mark had a positive effect on SAP's results. Currency effect amounted to DM 423 million (11%) on revenue, DM 301 million (11%) on costs, and DM 117 million (12 %) on pretax profits.
Sales of the flagship R/3 system climbed 63% to DM 3.87 billion, while total product revenues grew by 56% to DM 4.10 billion. Consulting revenues increased 70% to DM 1.25 billion; training revenues rose 90% to DM 580 million. Geographically, sales outside of Germany represented 81% of total revenues (1996: 75%). The Americas region grew 91% to DM 2.57 billion. Underlying revenues in the APA (Asia Pacific) region were not impacted by the Southeast Asian financial crisis, increasing 66% to DM 807 million. Revenues in Europe (ex- Germany) rose 59% to DM 1.37 billion, and in Germany increased 23% to DM 1.17 billion.
SAP shipped R/3 Release 4.0 to the first pilot customers on schedule in December 1997; the new release will become generally available at the end of the second quarter of 1998. R/3 4.0 demonstrates SAP's componentization strategy of building a portfolio of stand-alone software components. Release 4.0 features enhanced functionality for the value chain, separation of the main HR components from the core logistics and financials areas, as well as new features including treasury management, additional Internet applications, and new industry solutions, e.g. for retail and the public sector.
''We continue to enhance and extend the R/3 product portfolio; the launch of new initiatives in supply chain management, electronic commerce, data warehousing, sales support and customer service systems are laying the foundations for outstanding growth through the year 2000 and beyond,'' said Prof. Dr. h.c. Hasso Plattner, Co-Chairman and CEO.
At the end of 1997, the company employed 12,860 people, an increase of 40% from 1996. In the US alone, SAP created 900 new positions, for a total of 2,600 employees at the year end. In order to leverage long-term growth opportunities, SAP expects to increase its worldwide headcount by 5,000 in 1998. Per capita sales based on the average headcount for the year (11,558) rose to DM 521,000 ($290,720) (1996: DM 455,000).
''By all measures, 1997 was a great year for SAP America - ASAP implementation, training, services, and sales all showed that our tireless focus on the customer drives our success,'' said Paul Wahl, CEO, SAP America and Executive Board Member. ''The innovations SAP will roll out in 1998 promise to lengthen our lead in this marketplace.''
The Executive Board anticipates a 30 to 35% increase in sales in 1998, with pretax profits growing at a similar rate. These figures are based on careful estimates of the impact of European monetary union and year 2000 issues on growth, and also reflect uncertainty about the repercussions of the Southeast Asian financial crisis.
The listing of SAP's ADRs on the New York Stock Exchange in the third quarter of 1998 is intended to broaden the existing shareholder base and raise SAP's profile in the world's largest IT market.
SAP will publish its final results on March 25, 1998. This year's Annual Shareholder's Meeting will take place on May 7 at the 'Rosengarten' conference center in Mannheim, Germany.
SAP AG preference and common shares are listed on the Frankfurt Stock Exchange, as well as a number of other exchanges. SAP is a component of the DAX, the index of 30 German blue chip companies. In the US, SAP's unrestricted ADR, each equivalent to one-third of an SAP preference share, trades over the counter under the symbol ''SAPHY''.
Information on the SAP AG preference shares is available on Bloomberg under the symbol SAG3 GR, on Reuters under SAPG_p.F or DE and on Quotron under SAGVD.EU. Information on the SAP common shares is available on Bloomberg under the symbol SAG GR, on Reuters under SAPG.F and on Quotron under SAGR.EU. Additional information is available on SAP AG's home page: sap.com.
* US dollar equivalents are provided for reader convenience at the December 31, 1997 exchange rate of US $1 = DM 1.7921.
FOR TABULAR INFORMATION PLEASE CALL TAYLOR RAFFERTY ASSOCIATES AT 212-889-4350
Contact:
SAP America
Kevin S. McKay, 610-725-4060
-or-
SAP AG
Michael Pfister, 011-49-6227-74-1758
-or-
Taylor Rafferty Associates
James P. Prout, 212-889-4350
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Time to mortgage the farm.....
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