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UPDATE 2-Sage says growth in Europe absent as markets toughen
July 16, 2012 / 6:33 AM / 5 years ago

UPDATE 2-Sage says growth in Europe absent as markets toughen

* Says Europe flat in third quarter

* Says overall trading “broadly in line”

* Shares down 2.7 pct

By Paul Sandle

LONDON, July 16 (Reuters) - British software company Sage Group Plc said trading conditions in mainland Europe had toughened since April, resulting in no sign of the improvement in growth it had expected in the region.

The company, whose accounting and business management software is used by more than 6 million companies worldwide, said, however, that better trading in North America quarter-on-quarter and good growth in Britain and Ireland were helping keep it broadly on track.

Chief Executive Guy Berruyer said on Monday the group remained cautious on the outlook for Europe and watchful of the region’s economic climate, although the strong fundamentals of the business remained intact.

Sage said it was seeing stronger growth in South Africa and Australia, and noted the group entered the Brazilian market last month by buying a controlling interest in Folhamatic, a leader in the relatively underdeveloped small business software market in the country.

The deal was welcomed by investors and the shares have risen 12 percent since it was announced.

The focus shifted back to its established European markets on Monday, however, and the shares dipped 2.7 percent on its cautious outlook.

Analysts at brokerage Numis cut their forecasts, which were already very slightly below consensus, by between 1 and 2 percent and moved their rating on the stock to “hold” from “add”.

“Mainland Europe is becoming incrementally more difficult for Sage,” Numis said. It reduced its earnings per share forecast for this year to 19.4 pence from 19.7 pence, against a consensus of 20 pence.

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