SAP said in a statement its net profit amounted to 186 million eurosmillion dollars) in the period from January to March, compared with 65 million euros a year earlier.

The bottom-line profit figure was higher than analysts had been expecting: Consensus forecasts had tabled first-quarter net profit of 158 million euros.

Underlying profits, too, rose sharply, with earnings before interest, tax, depreciation and amortisation (EBITDA) rising to 348 million euros from 240 million euros.

By contrast, sales fell by eight percent to 1.52 billion euros and software licence revenues declined by 12 percent to 352 million euros.

Much of the decline in revenues was attributable to exchange rate fluctuations, however, and adjusted for such factors, overall sales actually rose by one percent and licence revenues fell by only four percent on a 12-month basis, SAP said.

But the company also managed to prevent weak sales growth translating into lower earnings by cutting costs across the board, with overall operating expenses reduced by 17 percent to 1.22 billion euros.

Looking ahead to the rest of the year, SAP said that "while the world economy remains difficult and the geopolitical environment is still unpredictable, we have not changed our guidance for 2003."

SAP said it expected to "continue to gain market share, and based on modest revenue growth, continued cost containment and customer buying patterns in line with normal business seasonality," its operating margin would increase by around one percent for the whole year to 23.7 percent.

The operating margin -- which measures operating earnings as a proportion of sales -- stood at 20 percent in the first quarter, up from 14 percent a year earlier.

Full-year earnings per share were expected to reach 3.45-3.60 euros in 2003, SAP added.

SPACE.WIRE