Activist investor Elliott participates in SAP


Dhe activist investor Elliott has made public a stake in Europe's largest software company SAP. The stake has a value of 1.2 billion euros, said Elliott on Wednesday. This is just under one percent of the current market value of the Walldorf Group of around 130 billion euros. The American hedge fund backed SAP management. "Elliott fully supports the initiatives announced today," said Elliott.

The activist investor has recently made a name for himself among others at the industrial group Thyssen-Krupp, the energy company Uniper and the flagging plant manufacturer Gea. Elliott also announced a "constructive dialogue" with the management at Thyssen-Krupp. Afterwards, CEO Heinrich Hiesinger and later Ulrich Lehner later resigned. The latter then spoke openly of "psychoterrorism" against the management of the shareholders. Elliott had been associated with rude methods in other cases as well. For the hedge fund of Paul Singer it is the first technology investment in Europe.

Higher forecast

After an unexpectedly strong start to the year, SAP had promised higher operating results for 2019 and the coming year. Also its operative yield wants to improve Europe's largest software company further medium term. "SAP is growing significantly faster than our competitors, both in its core business and in the cloud," said Bill McDermott, CEO.

Sales in the emerging business of applications and data stored and provisioned on the Internet peaked at $ 1.5 billion for the first time in the quarter, an increase of 48 percent. Key new cloud bookings increased 26 percent on a currency-neutral basis, up from 23 percent in the previous quarter. By 2023, SAP is aiming for a gross margin of up to 75 percent in cloud business, as McDermott announced.

Given the good forecast, the SAP share gained about 6 percent on Wednesday morning. The operating return is expected to continue to improve until 2023, with an annual average of one percentage point. "That's the magical moment people have been waiting for," said McDermott. In the first quarter, the operating margin was 24 percent after 23.5 percent a year before. Sales climbed 16 percent to 6.12 billion euros.

So although SAP's business is booming, high costs for ongoing staff redesign have brought the software group a bottom line loss for the first time in a long time. The minus amounted to 108 million euros in the first quarter after 708 million euros profit in the same period last year. Chief Financial Officer Luka Mucic assured that the majority of the costs had been realized. He does not expect significant adjustments in the following quarters. For the full year, SAP will be in the black, Mucic assured Wednesday in Walldorf.



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