CEO Christian Klein announces increased investments in artificial intelligence. However, the number of employees is expected to remain stable despite an impending corporate restructuring worth billions.
A booming cloud business and savings have helped SAP achieve strong growth in 2023. The German software company then announced another double-digit percentage increase in sales and profits for the current year on Wednesday night. To this end, the group is to be extensively restructured for two billion euros.
According to the information, the operating result rose last year by 13 percent after adjusting for currency effects to 8.72 billion euros, which was more than expected by industry experts. Analysts commissioned by the company had predicted an increase of 9 percent. Cloud revenue grew by 23 percent to 13.66 billion euros.
“We kept our word and achieved double-digit growth despite an unfavorable macroeconomic environment,” said SAP CFO Dominik Assam. He wants to further increase profitability in the current year. For 2024, the company is targeting an increase in cloud sales of 24 to 27 percent to 17 to 17.3 billion euros. The operating result is expected to increase by 17 to 21 percent to 7.6 to 7.9 billion euros.
SAP wants to invest more in AI
SAP boss Christian Klein also announced increased investments in artificial intelligence (AI). Offers based on this technology are well received: “More than half of our customers choose our premium packages.” According to previous statements, SAP can charge surcharges of up to 30 percent for its AI offers.
In addition, Klein expects efficiency gains from the internal use of AI and is responding to this by restructuring the company. Some of the approximately 8,000 employees affected should be retrained and relocated. Others would be encouraged to change employers. Thanks to new hires in promising areas, the total number of employees will probably remain stable. A year ago, SAP announced it would cut 3,000 jobs due to falling profits.
Regardless of this, the group adjusted its medium-term goals to take into account changed accounting practices. Because the relevant key figures in the future will include the costs of stock compensation, among other things, the operating profit in 2025 will now be around 10 billion euros instead of around 11.5 billion euros. Here too, the company is above expectations: analysts had expected a more significant reduction. As before, SAP is forecasting 37.5 and 21.5 billion euros for group and cloud sales. (APA/Reuters)
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