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SAP Q4 operating profit rises 7% on license renewals

[FRANKFURT] Europe's largest software company, SAP on Tuesday reported a 7 per cent rise in operating profits, driven both by year-end software license renewals and customers converting to newer cloud-based software.

Fourth-quarter operating profit, excluding special items, rose to 2.28 billion euros (US$2.47 billion) from 2.13 billion euros in the same period a year earlier.

SAP said its results were helped by renewals from existing customers of higher-margin, licensed software plus faster growing, albeit less profitable, Internet-based software and the sales impact of a weaker euro against other currencies.

Full-year operating profit came in 13 per cent higher at 6.35 billion euros.

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A year ago, SAP set out a target for 2015 operating profit, in constant currency, of 5.6 billion to 5.9 billion euros, representing flat growth to an increase of 5 per cent over 2014.

The company had targeted operating profit of 6 billion to 6.4 billion euros, factoring the effect of a weaker euro into the mix.

On that basis, a Reuters poll of 15 analysts forecast a 6.3 billion euro operating profit, excluding special items, with individual estimates ranging from 6.25 billion to 6.52 billion euros.

SAP said it expected 2016 non-IFRS operating profit to be between 6.4 billion euros and 6.7 billion at constant currencies.

Analysts polled by Reuters on average expect operating income of 6.7 billion euros, with individual estimates ranging from 6.3 billion to 7.1 billion euros.