German software maker SAP expects to increase its core sales and operating margins in 2010 but cautioned that market conditions were still tough because companies remain wary about investing.
SAP, which competes with US software company Oracle, surprised the market two weeks ago with a strong fourth-quarter performance in Asia, seen as a sign that some tight corporate budgets may be easing.
"Along with margin expansion for 2010, we are also ready to return to top-line growth, although the market continues to be challenging and uncertainty among customers still exists," chief executive Leo Apotheker said in a statement.
SAP, which is switching to IFRS reporting from U.S GAAP, said it expects 2010 non-IFRS software and software related service revenue to increase 4-8 percent at constant currencies.
It aims to reach a full-year 2010 non-IFRS operating margin in a range of 30-31 per cent at constant currencies, up from 27.4 per cent in 2009.
DZ Bank analyst Oliver Finger said in a note that the company's guidance was in line with the bank's assumptions "but slightly misses the street consensus in terms of operating margin at constant currencies".
SAP, founded in 1972 in Walldorf near Heidelberg, fought the impact of the financial crisis with cost savings implemented in October 2008 after sales dropped sharply.
It also cut some 3,000 jobs - a first for the company.
SAP trades on a 12-month forward price/earnings ratio of 15.9 times, a premium to Oracle's 14.3, according to Thomson Reuters StarMine, which weights estimates by analysts' previous accuracy.
Reuters