UPDATE 2-Obamacare contractor CGI profit misses, shares slide

Wed Jan 29, 2014 12:28pm EST
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* Adjusted EPS of C$0.65 misses expectation of C$0.70

* Revenue in line at C$2.64 billion; bookings up

* CGI says no ill-effect from healthcare.gov problems (Adds comments from analyst and CGI executive, details, share reaction)

By Alastair Sharp

TORONTO, Jan 29 (Reuters) - Canadian computer services provider CGI Group Inc, the contractor behind the troubled Obamacare enrollment website, reported weaker-than-expected quarterly results on Wednesday, sending its shares to a four-month low.

The Montreal-based company said revenue and bookings - an indicator of future sales - were both strong in its first quarter despite losing the contract to manage the U.S. federal healthcare enrollment website it helped build.

But it also reported U.S. margin pressure and said cash from operations slipped to C$66 million ($59.19 million), down from C$224.5 million a year earlier. It blamed delays in collecting payments on some contracts as well as a hit from payments related to the integration of former British competitor Logica, which it bought more than a year ago to expand its European presence.

The company said it expects both of those problems to be temporary and predicted cash generation of around C$300 million per quarter in coming quarters. CGI said it generated more than C$800 million in cash from operations over the previous 12 months, excluding Logica integration costs.

It also said that revenue - which would have shrunk if not for advantageous currency rates - was pressured by a deliberate move away from low-margin business, and that costs in the United States rose as it pushed to hit year-end targets.   Continued...