SAP to Cut 3,000 Jobs After Profit Plunges
BERLIN—Software company
SAP
SAP -0.03%
SE joined the ranks of tech companies announcing job cuts this year, saying it would shed up to 3,000 positions after a steep profit drop in late 2022.
After growing rapidly at the height of the Covid-19 pandemic, technology companies have been laying off workers mainly in the U.S., with large employers such as
parent Meta Platforms Inc. and Amazon.com Inc. shedding thousands of jobs last year.
Finance chief
Luka Mucic
told reporters on Thursday that the job cuts would include layoffs and be spread across the company’s geographic footprint, with most of them happening outside the business-software company’s home base in Germany.
“The purpose is to further focus on strategic growth areas,” Mr. Mucic said.
SAP expects to book restructuring costs of 250 million to 300 million euros in the first quarter of this year and to see annual savings of up to 350 million euros, or about $382 million, in 2024.
The planned job cuts affect about 2.5% of SAP’s global workforce. The company employed around 111,015 on average last year, compared with 104,364 employees the previous year.
SAP said it had put its Qualtrics employee-survey software business up for sale, but it didn’t elaborate on any talks with potential buyers or how much it expects a sale to generate.
The company said net profit fell 47% to €1.2 billion in the three months to the end of December, hit by the impact of its withdrawal from Ukraine in the wake of Russia’s invasion last year and the poor performance of its startup-investment business Sapphire Ventures.
SAP ended the last quarter of 2022 with revenue of €8.44 billion, up from €7.98 billion in the fourth quarter of 2021.
Like many other software companies, SAP has been shifting from selling permanent licenses to offering more lucrative cloud-based subscription services for its financial-reporting, inventory-tracking and human-resources applications.
While the new business recorded strong growth in the last quarter, including an announcement on Thursday that the company had secured a significant contract with
Bayerische Motoren Werke AG
, the luxury car maker, the legacy software-license business continued to decline.
BMW’s industrial cloud is to be merged with SAP’s premium cloud business, which the companies said would help BMW accelerate the digitization of operations such as finance, parts supply, warehousing, supply chain and production.
Cloud revenue increased to €3.39 billion from €2.61 billion, while software-licenses revenue fell to €907 million from €1.46 billion.
Revenue was largely in line with forecasts by analysts polled by FactSet, who had estimated overall revenue of €8.51 billion and cloud revenue of €3.44 billion.
Operating profit for the quarter rose to €2.58 billion from €2.47 billion, with growth dulled by losses from the company’s withdrawal from Ukraine.
The company said exiting its Ukraine business reduced operating profit overall by €70 million in the quarter and €290 million for the full year “mainly because of reduced revenues and bad debt provisions.”
—Mauro Orru contributed to this article.
Write to William Boston at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
BERLIN—Software company
SAP
SAP -0.03%
SE joined the ranks of tech companies announcing job cuts this year, saying it would shed up to 3,000 positions after a steep profit drop in late 2022.
After growing rapidly at the height of the Covid-19 pandemic, technology companies have been laying off workers mainly in the U.S., with large employers such as
parent Meta Platforms Inc. and Amazon.com Inc. shedding thousands of jobs last year.
Finance chief
Luka Mucic
told reporters on Thursday that the job cuts would include layoffs and be spread across the company’s geographic footprint, with most of them happening outside the business-software company’s home base in Germany.
“The purpose is to further focus on strategic growth areas,” Mr. Mucic said.
SAP expects to book restructuring costs of 250 million to 300 million euros in the first quarter of this year and to see annual savings of up to 350 million euros, or about $382 million, in 2024.
The planned job cuts affect about 2.5% of SAP’s global workforce. The company employed around 111,015 on average last year, compared with 104,364 employees the previous year.
SAP said it had put its Qualtrics employee-survey software business up for sale, but it didn’t elaborate on any talks with potential buyers or how much it expects a sale to generate.
The company said net profit fell 47% to €1.2 billion in the three months to the end of December, hit by the impact of its withdrawal from Ukraine in the wake of Russia’s invasion last year and the poor performance of its startup-investment business Sapphire Ventures.
SAP ended the last quarter of 2022 with revenue of €8.44 billion, up from €7.98 billion in the fourth quarter of 2021.
Like many other software companies, SAP has been shifting from selling permanent licenses to offering more lucrative cloud-based subscription services for its financial-reporting, inventory-tracking and human-resources applications.
While the new business recorded strong growth in the last quarter, including an announcement on Thursday that the company had secured a significant contract with
Bayerische Motoren Werke AG
, the luxury car maker, the legacy software-license business continued to decline.
BMW’s industrial cloud is to be merged with SAP’s premium cloud business, which the companies said would help BMW accelerate the digitization of operations such as finance, parts supply, warehousing, supply chain and production.
Cloud revenue increased to €3.39 billion from €2.61 billion, while software-licenses revenue fell to €907 million from €1.46 billion.
Revenue was largely in line with forecasts by analysts polled by FactSet, who had estimated overall revenue of €8.51 billion and cloud revenue of €3.44 billion.
Operating profit for the quarter rose to €2.58 billion from €2.47 billion, with growth dulled by losses from the company’s withdrawal from Ukraine.
The company said exiting its Ukraine business reduced operating profit overall by €70 million in the quarter and €290 million for the full year “mainly because of reduced revenues and bad debt provisions.”
—Mauro Orru contributed to this article.
Write to William Boston at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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