SAP CFO Brandt Sees Dividend Increase, Focus on Integration

SAP AG (SAP), the largest maker of business-management software, plans to increase its dividend this year and concentrate on integrating past acquisitions rather than embarking on new ones.

“We will focus,” Chief Financial Officer Werner Brandt said in an interview at the company’s headquarters in Walldorf, Germany. “We will not open up the next big mergers and acquisitions project right now, because there are fantastic and exciting opportunities ahead with the technology and solutions we have.”

The software maker, which competes with Oracle Corp. (ORCL) to sell Web-based software and mobile applications, will concentrate on tasks such as rolling out a new version of its Business Suite software and linking its existing business to the Web marketplace of Ariba Inc., which it bought for $4.3 billion last year, according to Brandt.

While the dividend will increase, according to Brandt, the amount of the next payment still needs to be determined by the supervisory board. Analysts expect the regular payout to reach 85 euro cents ($1.13) a share this year, up from 75 cents in 2012, data compiled by Bloomberg show. Last year, SAP also paid a special dividend of 35 euro cents for its 40-year anniversary.

SAP may resume share buybacks, which it stopped to help finance the 2011 acquisition of SuccessFactors Inc., once it reaches net liquidity of between 1.5 billion euros ($2 billion) and 2 billion euros, according to Brandt.

While the figure fell to a negative 2.5 billion euros at the end of last year following the purchase of Ariba, an annual free cash flow of about 3 billion euros should enable SAP to rebound soon, he said. A net liquidity of 4 billion euros would be ideal, Brandt added.

Younger People

SAP today forecast an increase in sales and profit for this year. The company plans to refine its longer-term target, which calls for revenue to exceed 20 billion euros by 2015, sometime this year, possibly at the shareholder meeting in June, Brandt said.

The company’s ratio of adjusted operating profit to sales will increase by about 1 percentage point this year to 33 percent and probably rise steadily to reach the 35 percent- margin target set for 2015, according to Brandt.

The bonuses of board members may suffer after earnings last year missed the company’s target, he said. Employee numbers probably won’t vary much after 8,700 full-time posts were added in 2012. Any hiring will be concentrated on software developers and sales representatives, Brandt said.

Brandt, who has served as CFO since joining SAP in 2001, said he plans to step down following the company’s shareholder meeting in mid-2014, after helping train his successor.

“I’ll be 60 then, and I think younger people should take the helm,” he said. “I’m looking forward to other opportunities which might be coming my way then,” he said, adding that he may look beyond the technology industry for future tasks.

To contact the reporter on this story: Cornelius Rahn in Berlin at crahn2@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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