€2B SAP restructure program will affect 8,000 roles

Plans announced as profits fall and revenues rise

German software giant SAP has announced a restructuring program likely to hit 8,000 jobs worldwide.

The plans were confirmed along with financial results for Q4 and full-year 2023. Operating profit for 2023 was down five percent year-on-year to €5.78 billion and revenue grew six percent to €31.2 billion.

Operating profit for the quarter was also down five percent on a year earlier to €1.9 billion, and revenue increased five percent to €8.5 billion.

The 50-year-old ERP company took the opportunity to announce restructuring plans set to affect seven percent of the workforce. In a statement, it said most of the 8,000 roles affected are to be covered by voluntary leave programs and internal re-skilling. The company, however, claimed that due to hiring in "strategic growth areas," its headcount would remain similar to current levels during 2024.

Megabuyte analyst Nathan Jackson said: "SAP will likely be glad to see the back of what has been a rocky and uncertain 2023 with guidance for the full year changing both positively and negatively in almost each quarter."

He said the cloud transition programs, RISE and GROW with SAP, were positive throughout the year, according to the company, but "we're not entirely convinced – we question the pace at which they are directing existing high-value customers towards consuming S/4HANA cloud."

The cost of the restructuring program was pegged at €2 billion. Shares climbed five percent in extended trading after the news went out.

In a statement, SAP CEO Christian Klein said: "We met or exceeded our outlook for 2023 in all key metrics. We are confident about the company's prospects in 2024. From this position of strength, SAP is opening the next chapter: with the planned transformation program, we are intensifying the shift of investments to strategic growth areas, above all business AI. Going forward, this will empower us to keep leading with innovation while increasing the scalability of the operating model."

The company was keen to slice out its cloud earnings as it is trying to repaint itself as a SaaS and cloud company. For Q4, cloud revenue grew 20 percent to reach €3.7 billion. Software license and support revenue was also at €3.7 billion, falling 5 percent compared to a year earlier.

In January last year, SAP announced a "targeted restructure" affecting CRM and "industry portfolio" teams, cutting around 3,000 jobs. ®

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