Favorable context for acquisitions, says CGI management
Even after having recently extended more than half a billion dollars to make two acquisitions, CGI does not rule out the possibility of continuing its shopping as the opportunities seem to be there.
According to the leaders of the Quebec firm specializing in information technology and consulting services, the prices to be paid to potentially make new transactions seem more interesting on the Old Continent.
“On the public side, our stock has performed well, unlike other companies that have been exposed to some macroeconomic elements in Europe,” CGI President and CEO George Schindler said on Wednesday. a conference call to comment on the third quarter results, in which the company partially met analysts’ expectations.
Last March, the multinational announced the acquisition of the Swedish firm Acando, which has more than 2100 employees, for nearly $ 624 million, before presenting in June, an offer of about $ 131 million to put hand on Scisys, specializing in the sectors of the space industry and defense, as well as in the media and information.
The conclusion of this transaction concerning the British firm also present in Germany is expected by the end of the year.
“In short, we are well positioned to achieve our strategic plan to double the size of CGI (which has approximately 77,500 employees) over the next five to seven years,” said Schindler.
CGI Chief Financial Officer François Boulanger said the company had cash in excess of $ 1.3 billion.
Despite the uncertainty still lingering in the UK – the fourth largest market in the company – due to Brexit, the impact should be limited on the company’s business, once again repeated Mr Schindler.
There may, however, be some slowdown, particularly in the awarding of contracts, as new Prime Minister Boris Johnson says that the UK will leave the EU on October 31, with or without agreement.
“The (government’s) focus is on scenario planning, and that just creates a temporary barrier,” said Schindler.
As for its financial performance for the three-month period ended June 30, the company earned net income of $ 309.4 million, or $ 1.12 per share, up 7.3 percent from one year ago.
Its revenues were $ 3.12 billion, up 6.1 percent. Increases were recorded in all markets, with the exception of the United Kingdom and Australia, where revenues declined by one per cent. CGI explained that some contracts had not been renewed.
According to Maher Yaghi of Desjardins Capital Markets, excluding acquisitions, CGI’s organic revenue growth was approximately 3.6 per cent, compared to four per cent last quarter.
“This is healthy growth, but this is the first time since the third quarter of fiscal 2018 that organic growth has not accelerated from one quarter to the next,” the analyst said. in a note.
Excluding non-recurring items, adjusted earnings were $ 337.2 million, or $ 1.22 per share, compared with $ 309.7 million, or $ 1.08 per share, in the same period previous year.
CGI met the expectations of analysts polled by Refinitiv, who were expecting an adjusted profit per share of $ 1.22. The company’s revenues, however, were below the target of $ 3.15 billion.
At the end of June, the firm’s order backlog was $ 22.42 billion, up from $ 22.4 billion at the end of the third quarter last year.
On Wednesday, mid-day, CGI’s stock traded at $ 102.22 on the Toronto Stock Exchange, down $ 2.15, or 2.06 per cent.
Company in this dispatch: (TSX: GIB.A)