SAP Systems Integration lowers earnings forecast

SAP Systems Integration AG (SAP SI), a majority-owned subsidiary of German business software company SAP AG, reported Monday preliminary figures showing a sharp fall in first-half operating profit, due largely to charges. The company projected 2002 sales to be lower than previously forecast.

Preliminary figures show that first-half operating profit at SAP SI, which implements and operates IT systems using SAP business software, fell to approximately €6 million (about AUD$10 million), down from €19.9 million in the first half of 2001. The company attributed the sharp decline in operating profit to charges relating to restructuring and provisions against bad debt.

SAP SI said it expects the economic outlook in the second half of the year to remain weak. Demand for IT consulting services, the company said, will remain low and price pressure will continue.

As a result, the company now projects 2002 sales to grow between 9 percent and 12 percent, down from its earlier forecast of between 15 percent and 20 percent. It expects operating profit margin for the year to grow between 9 percent and 12 percent, below its previous forecast of between 15 percent and 17 percent.

SAP SI said its preliminary first-half sales increased by around 16 percent to €146 million.

The company plans to release full first-half results on July 30.

The SAP SI announcement follows a Thursday profit warning from SAP AG, which revised its full-year 2002 revenue growth forecast to between 5 percent and 10 percent growth, from its previous forecast of 15 percent. SAP's total sales in the second quarter fell by 4 percent to €1.78 billion.

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