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SAP's CEO hints to investors more margin gains on the way

Reuters  |  MANNHEIM, Germany 

By Patricia Uhlig

MANNHEIM, (Reuters) - The of struck a confident note on the German software giant's future on Thursday, hinting that further operating profit margin gains were on the way, while apologising for corporate governance missteps in

Speaking to investors at the company's here, said had made mistakes in failing to better detect corrupt practices used to win contracts. But he said the company had responded quickly to prevent similar practices re-occurring.

"Trust is earned in drops, but lost in buckets," McDermott said. "When we make mistakes, we admit them so we can fix them."removed executives in and made sweeping changes to its global sales practices.(https://reut.rs/2INyK68) It also acknowledged that it had paid funds to firms with links to the politically influential Gupta family, which were at the heart of a scandal that toppled

On a more upbeat note, McDermott said its latest quarterly results showed SAP was beginning to enjoy operating margin expansion for the first time since it began investing heavily in shifting its business from up-front licensing to subscriptions.

"This is one of many reasons that momentum in our share price has been re-established over the past several weeks," he said, before suggesting further gains were on the way. "Our shareholders should continue to benefit from this momentum".

SAP's American-born said Germany's most valuable stock remains committed to once again tripling its market capitalisation while declining to set any timeline for achieving the goal. SAP's share price trebled between 2010 and 2017.

"There is clearly the potential to triple the value of this company. We believe that is only a matter of time," McDermott told investors, reiterating previous comments on the target.

"While we are not giving a specific time frame, we are certainly charging ahead with this in mind," he said.

The company's market capitalisation stands at just above 118 billion euros ($139 billion). Rival U.S. is valued at around $190 billion.

At the annual general meeting, SAP asked for and received shareholder approval that sets limits on compensation, seeking to deflect anger in the country over McDermott's big, American-style payout, which is higher than any German peer.

(Reporting by Patricia in Mannheim; Writing by in London; Editing by Adrian Croft)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, May 17 2018. 23:35 IST
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