Europe proves a drag on Sage’s trading

Newcastle-based Sage said its hopes of a return to growth in Europe were dashed as the region’s economic crisis continues to rage, offsetting stronger demand from small and medium-sized businesses in the UK and Ireland.

Trading across the group was in line with expectations over the third quarter between April and June but shares fell 3 per cent yesterday because of its cautious comments on Europe, which accounts for around a third of group profits.

In a statement, Sage commented: “The UK and Ireland business demonstrated good growth although conditions in mainland European markets have toughened.

“Overall performance in Europe has been flat and the anticipated improvement in growth over the first half has not yet materialised.”

Numis Securities said it would cut its forecasts by between 1 per cent and 2 per cent.

It added that France and Germany may have joined Spain in becoming tougher markets. Chief executive Guy Berruyer, who took over the helm in October 2010, said: “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.”

Sage is one of the few FTSE-100 companies based in the North East.