Software AG net profit up 31 pct in 2008

FRANKFURT, Germany - Germany's Software AG reported Tuesday a 31 percent rise in net profit in 2008, boosted by strong sales and the company's debut in new markets.

The Darmstadt-based company — the world's largest independent provider of mission critical software and Germany's second largest software company after SAP AG — said net profit in 2008 increased to euro116 million ($153.12 million) from euro88.4 million a year earlier.

Total revenues, including services, rose 16 percent to euro720 million from euro621 million a year earlier. Product revenues increased 19 percent to euro539 million, from euro454.2 million in 2007.

"In fiscal 2008, we showed that we have a sound business model and are well positioned in the market," Karl-Heinz Streibich, the company's chief executive, said in a statement.

"We have proven ourselves able to maintain our success in times of economic difficulty and are growing during the crisis."

The company said its successful entry into the Brazilian market, the smooth integration of its webMethods products and continued organic growth in the new webMethods division contributed to the good performance in fiscal 2008.

Software AG's Chief Financial Officer Arnd Zinnhardt told the AP the company was sticking to its outlook for 2009.

"We believe we will increase total revenues between 4 percent and 8 percent for the year," he said.

"Brazil is performing extremely well. We had euro40 million in sales in licensing and maintenance. Taking into consideration that we've been active there for just nine months is fantastic."

He said the company's earnings before interest and taxes grew by 32 percent to euro180.5 million in 2008, which he said was "extremely successful."

He added that free cash flow for the year grew by more than 60 percent in 2008 — an important consideration, Zinnhardt said, in the current environment where lenders are hard to find. Software AG intended to continue growing that measure of the company's business, he said.

Analysts lauded the company's performance.

"The stock should clearly benefit from the better-than-expected 2008 results and we believe the company will also confirm its 2009 guidance, based on the strong 2008 results," UniCredit analyst Knut Woller wrote in a morning research note.

Woller has a "Buy" rating on the stock with a target price of euro55. Shares of Software AG were up 9.2 percent at euro43 in Frankfurt afternoon trading.

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