Software AG first-quarter operating profit beats as cost cuts pay off

FRANKFURT (Reuters) - Germany's Software AG reported a smaller than expected decline in first-quarter operating profit as its cost-cutting measures started to pay off. Germany's second-largest business software maker after SAP said earnings before interest and taxes (EBIT) fell 3.9 percent to 29.3 million euros (21 million pounds). That beat the average estimate of 26.8 million euros in a Reuters poll, with individual estimates ranging between 23.5 million euros and 30.3 million. The Darmstadt-based company has shifted its focus to tools which help companies deliver their software over the Internet using so-called cloud computing from software that used to be installed on individual computers. As a result of that shift, which has lowered its cost base, the company's operating margin rose more than 4 percentage points to 24.8 percent. "Our Q1 business performance shows that our focus on value through recurring revenue growth and profitability, as announced last year, is successful," said Karl-Heinz Streibich, Software AG's chief executive in a statement. The company affirmed its 2015 outlook for an operating margin of between 27.5-28.5 percent. Shares in Software AG were indicated to open 2.8 percent higher, according to pre-market data from brokerage Lang & Schwarz at 0535 GMT, with the German blue chip index seen up 0.1 percent. (Reporting by Harro ten Wolde; Editing by Ludwig Burger and Maria Sheahan)