CGI Group profit doubles, bookings strong
By Alastair Sharp
TORONTO (Reuters) - CGI Group Inc GIBa.TO, the Canadian computer services provider involved in last year's botched rollout of the Obamacare U.S. health plan, said on Wednesday its quarterly profit more than doubled, driven by a 7 percent rise in revenue and strong European bookings, sending its shares higher.
Solid overseas demand, coupled with favorable currency gains, more than offset weakness in the U.S. market. CGI Group's contract to manage the online U.S. health exchange program was not renewed after a bungled launch created a political crisis for U.S. President Barack Obama.
The company has had more growth in Europe than in North America recently following its 2012 purchase of Logica, a former British competitor.
"If you look at the bookings for the U.S., it was weak," said Steven Li, an analyst at Raymond James. "The weakness was actually concentrated in U.S. federal, which is where all the healthcare exchanges contracts are."
Li said fewer federal contracts were on offer in general, but for CGI Group specifically, "what happened with Obamacare didn't help".
On a call with analysts, CGI Chief Executive Officer Michael Roach said the complicated U.S. project was a hiccup that has been blown out of proportion.
"Clearly, some of the work around the health exchanges have temporarily had an impact on the business," he said. "The reality on the ground versus the perception in the press, there's a big gap there."
He said CGI is still managing some state-based health exchanges and has been able to reset customer expectations and has already booked much of the cost of those projects, which could lead to a recovery in CGI's U.S. margins in the second half. Continued...