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CGI profit rises 10.5 per cent

 

The Canadian Press

January 27, 2009 at 11:27 AM EST

 

MONTREAL — CGI Group Inc. has reported a 10.5 per cent profit increase in its latest quarter to $79.5-million as revenue rose 11.7 per cent from a year earlier to just over $1-billion.

 

The 25,000-employee international information technology service provider said Tuesday that foreign exchange shifts boosted the top line by 7.4 per cent in its first quarter ended Dec. 31. Pre-tax earnings were up six per cent to $105.2-million.

 

CGI recorded bookings of $775-million in the quarter, down from $1.13-billion a year earlier, while its operating profit margin slipped to 11.4 per cent from 11.8 per cent.

 

The quarter's net income of $79.5-million, 26 cents per share, compared with $71.9-million or 22 cents per share a year earlier, when revenue was $895.4-million.

 

The latest quarter's earnings adjusted for one-time items came in at 22 cents per share, in line with market expectations.

 

The company said it plans to continue a stock buyback which in the past year cancelled 18.5 million shares at an average price of $10.68.

 

CGI ended the quarter with $216-million in cash and $1.3-billion available in a credit line, which CEO Michael Roach said provides “the financial flexibility to execute our profitable growth strategy.”

 

Desjardins Securities analyst Eric Bernofsky commented that investors will likely be concerned about the 31.7 per cent drop in bookings, but noted that year-ago business signings were unusually strong and there is quarter-to-quarter “lumpiness” in new contracts.

 

On the bright side, Mr. Bernofsky wrote in a note, revenue from American clients grew 14.1 per cent on a constant-currency basis, which “should be viewed very positively in light of the current economic climate. As we had anticipated, higher work volumes from the government and health-care verticals contributed to the strong revenue growth.”

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