Software AG's key objectives for 2004 were to stabilize revenue and significantly increase profitability. With revenue stable, at constant currency rates, and significant profit growth, both objectives were achieved. The consistent implementation of the company strategy also created a solid base for future profitable growth.

The global economy

Strong growth of the global economy continues
In 2004, the global economy experienced a growth of almost 5 percent. This growth, which was strongest during the first half of the year, was driven primarily by the economies of the USA, China, and other Asian countries. In the USA, massive tax cuts as well as expansive monetary policies strengthened the economy, which grew by 4.3 percent. With growth of 4.4 percent in 2004, the economic recovery of 2003 continued in Japan. In the south-east Asian countries, GDP grew by 4.6 percent. China proved to be the strongest market in the region, with 9.5 percent growth. In Latin America, the GDP increased by 4.6 percent, supported by a general economic recovery, rising raw material prices and stronger domestic demand.

Bull market in the eurozone
Economic growth within the eurozone improved slightly in 2004. The real GDP of the Euro countries increased by 2 percent – following roughly 1.5 percent in 2003. Although the eurozone is still far from meeting the objectives defined in the Lisbon agenda, both production and business climate still showed slight improvements. Consumer confidence and retail revenue did not meet expectations. At the same time, the strong Euro, which gained 10 percent on the US dollar over the year, had an increasing impact on exports.

In Germany, economic growth was somewhat restrained. According to the OECD, it amounted to around 1.2 percent in 2004. The United Kingdom, however, registered a 2.9 percent GDP increase. In the countries that joined the European Union, growth expectations were met. Their economies were driven by high earnings and direct investments.