European woes lead to stalled growth at Sage

BRITISH software group Sage yesterday said anticipated growth in mainland Europe had not materialised due to what it called a “toughening economic environment”.

The company, which is Britain’s largest listed software firm based on market capitalisation, said trading in Europe had been flat and was below previous forecasts, although sales on the whole had been “broadly in line with expectations”.

The firm reported growth in the UK and Ireland and in North America, but poor sales in mainland Europe – which makes up 60 per cent of Sage’s business – meant its shares dropped by over three per cent yesterday.

Sage had previously said it expected trading in Europe to pick up after reporting disappointing first-half figures in May.

“Whilst we remain cautious on the outlook for Europe, and watchful of this region’s economic climate, the strong fundamentals of our business model remain and we continue to make good progress,” Sage’s chief executive Guy Berruyer said.

The company has attempted to reduce its reliance on Europe by targeting growth in emerging markets, including purchasing a 75 per cent stake in Brazilian software firm Folhamatic for £125m last month. Sage also saw “strong performances” in South Africa and Australia.

The firm, which sells software to small and medium-sized businesses, has suffered from the difficult conditions in mainland Europe, especially in Spain, where 23 per cent of businesses employing between 10 and 100 people have closed down since the downturn started. Analysts warned yesterday that Sage’s problems could spread to France and Germany.