SAP, the world's leading maker of business software, has said earnings rose strongly in 2006 but it expected increased investment to reduce profitability slightly in 2007.
SAP reported net profits of €1.9 billion last year, up 25% from 2005. In the fourth quarter alone, net profit jumped 29% to €799m.
Software licence sales, a key benchmark for the sector because companies use them to generate revenue from maintenance and consulting, rose by 10% to €3 billion in the whole of 2006, with a 7% increase in Q4.
SAP had already said two weeks ago that it would not meet its targets for software licence sales in 2006, triggering a sharp drop in the company's share price at the time.
Overall sales, which also include revenues from consultancy, training and maintenance activities, rose by 10% to €9.4 billion in the whole of 2006.
SAP was cautious about 2007, projecting an increase of 12-14% in revenues from software and software related services, compared with growth of 12% last year It added that margins would slip as a result of investment in new business.
