October 26, 2020
10:16
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The German business software specialist SAP is adjusting its medium-term outlook due to the corona pandemic.
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The German company expects the corona pandemic to continue to weigh on demand ‘at least’ until the first half of 2021, a Sunday evening revealed. press release. The virus will target SAP
cloud revenues, global sales and operating income slow by one to two years, especially in industries hard hit by corona.
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SAP, which specializes in business management software, has so far assumed that the demand environment would improve in the third and fourth quarters thanks to a reopening of the economies and the phasing out of lockdowns. But now some areas are back in lockdown and the recovery in demand was less strong than expected.
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Adjusted ambitions
SAP now expects, at constant exchange rates, a turnover of between 27.2 and 27.8 billion euros in 2020. The company previously estimated 27.8 to 28.5 billion euros. That doesn’t seem like such a big difference to account for a 20 percent drop at the opening of the stock exchange on Monday, the largest since 1999.
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According to analysts, the disappointment of investors is mainly in the medium-term outlook.
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According to analysts, the disappointment is mainly in the medium-term outlook. For example, compared to the ambition expressed in April last year, the target operating profit margin will decline by 4 to 5 percentage points by 2023. “The bottom line is that current consensus expectations for earnings per share over the 2021-2023 period should decline by about 15-20 percent,” said Citi analyst Amit Harchandani.
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Large impact on stock market indices
The corona warning from SAP puts pressure on the atmosphere on the European stock exchanges, which on average fell 1 percent on Monday. But the indexes in which SAP has great weight are getting extra beating. Thus the German DAX loses
2.4 percent, the Euro Stoxx50 index is down by 1.8 percent and the Stoxx600 Technology index has a historic rattle of 4.7 percent.
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