Bloomberg News

CGI Quarterly Profit Beats Estimates Helped by Logica Purchase

November 14, 2013

CGI Group Inc. (GIB/A), Canada’s biggest technology company, reported quarterly profit that beat analysts’ estimates, helped by integration of its Logica acquisition.

Excluding one-time items, fiscal fourth-quarter earnings were 67 Canadian cents (63.8 cents) a share, the Montreal-based company said today in a statement. Analysts had estimated 61 cents on average, according to data compiled by Bloomberg. Revenue climbed to C$2.46 billion from C$1.61 billion a year earlier.

Shares of CGI have more than doubled since 2009 as Chief Executive Officer Michael Roach made acquisitions, including the 1.7 billion-pound ($2.7 billion) purchase of Logica Plc that lifted the information services company’s profitability.

“After a full year, the Logica merger and successful execution of our integration program has, and will continue to yield significant benefits,” Roach said in today’s statement. “Our focus remains on realizing incremental revenue and cost synergies that will drive additional earnings accretion in fiscal 2014 and beyond.”

CGI has come under scrutiny recently for its role in building software for the U.S. government’s Obamacare website. Snags on the site that are a key part of Barack Obama’s 2010 Affordable Care Act prompted a slide in the shares last month and threatened to dent CGI’s reputation.

Scott Penner, a TD Securities Inc. analyst in Toronto, has estimated the Obamacare contract is valued at about C$290 million, or less than 3 percent of CGI’s annual sales of about C$10 billion.

The shares yesterday rose 1.4 percent to C$37.62 in Toronto for a seventh day of gains in the past eight trading sessions. The stock has climbed 64 percent this year.

CGI, which made more than 20 acquisitions in the last decade to challenge companies such as International Business Machines Corp. (IBM:US) was created in 1976 by billionaire Serge Godin. It now has about 69,000 employees and is the world’s fifth-largest information technology services company, according to Jefferies LLC.

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net


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