Software AG Raises Forecast on Profit Gain, IDS Scheer Purchase
Software AG, Germany’s second- largest software maker, raised its outlook for 2010 as sales growth and currency shifts helped third-quarter profit increase 18 percent. The shares rose the most in five months.
Net income jumped to 45.6 million euros ($63.5 million) from 38.7 million euros a year earlier, the Darmstadt-based company said today in a statement. Profit beat the 38 million- euro average estimate of 11 analysts surveyed by Bloomberg. Revenue rose 29 percent to 275.3 million euros.
Software AG specializes in streamlining business processes for customers including Coca-Cola Enterprises Inc., Apple Inc., and the European Central Bank. The company said profit this year will increase by 18 percent to 20 percent, compared with a forecast in July of 10 percent to 12 percent growth. The improved outlook reflects the purchase of IDS Scheer AG last year, Software AG said.
“Now that the organizational integration is complete, we are reaping the benefits of a significantly larger company,” Chief Executive Officer Karl-Heinz Streibich said in the statement. “Opportunities for profitable consulting projects have noticeably increased.”
Software AG rose as much as 4.14 euros, or 4.4 percent, to 99.34 euros, the biggest intraday gain since May 27, and was up 3 percent as of 11:17 a.m. in Frankfurt trading.
Corporations that postponed expenditures during the global recession are resuming spending on information technology, helping sales at Software AG and IDS Scheer, which customizes software bought from suppliers including SAP AG.
Second Forecast Increase
The raised outlook marks the second time that Software AG has boosted its forecast this year. It predicted full-year net income growth in February of 8 percent to 12 percent.
First-half revenue increases in the Americas continued in the third quarter, mainly in the U.S. and Brazil, the company said. Business in Germany, Australia and the Middle East also surpassed the group’s average, it said.
CEO Streibich said in July that Software AG aims to double sales every five to six years, with half the increase coming from acquisitions. Last week, the company said it’s buying Teaneck, New Jersey-based Data Foundations Inc., a provider of master data management. No purchase price was disclosed.
To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.
To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net
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