After an initial consolidation, Software AG has announced preliminary financial results for the second quarter of 2014. While sales in the ETS business developed as expected, the BPE business line was marked by a surprising reluctance by customers to commit to major infrastructure projects. Accordingly the annual forecast has been adjusted.
The Business Process Excellence (BPE) division had revenues of €85-million (previous year: €91,4-million) in the second quarter. License revenue with €33-million (previous year: €42,8-million) was under the previous year’s level.
Maintenance revenue, however, rose in the second quarter to €52-million (previous year: €48.6-million), an operating growth by 11%.
The traditional database business Enterprise Transaction Systems (ETS) was in line with expectations, with sales of €56-million (previous year: €75,8-million). License revenue amounted to €17-million (previous year: €32,6-million). ETS maintenance revenue was around €38-million euros (previous year: €43,1-million).
The Consulting division reported revenues of around €56-million (previous year: €70.5-million). The main reason was the deconsolidation of the SAP service activities. After the sale of the business focused on third-party solutions, Software AG will concentrate exclusively on the development, distribution and service of its own products.
The operating profit (non-IFRS) decreased in the second quarter to €45-million (previous year: €58.7-million); this corresponds to an operating margin of 23%. The reported EBIT (IFRS) was impacted by one-off effects from the deconsolidation of the SAP consulting business and is approximately €25-million (previous year: €44,4-million).
Due to the significant delays in major projects in the second quarter, the Group now expects full year 2014 BPE revenue to remain approximately at the previous year’s level. Revenue forecast in the traditional database business ETS remains unchanged at a reduction of 16% to 9% (net of currency effects). The company expects an operating margin (non-IFRS) of 26% to 28% for the full year 2014 (previous year: 26,8%).
The company will publish its full quarterly results on 24 July 2014.
