(Reuters) - IT services company CGI Group Inc (GIBa.TO) (GIB.N) reported a second-quarter profit above analysts’ estimates, partly helped by its acquisition of Logica Plc in August, sending its shares up more than 15 percent on Tuesday.
Excluding Logica integration costs, Canada’s largest IT services provider earned 56 Canadian cents per share on an adjusted basis, above the 50 Canadian cents analysts had expected.
The company completed the $2.64 billion acquisition of larger Anglo-Dutch rival Logica in August.
“Now people have more confidence in CGI and their ability to pull off Logica’s integration,” Morningstar analyst Swami Shanmugasundaram told Reuters.
Second-quarter revenue more than doubled to C$2.53 billion ($2.53 billion). Analysts were looking for C$2.56 billion on average, according to Thomson Reuters I/B/E/S.
Founded in 1976 and headquartered in Montreal, CGI is the fifth largest independent information technology and business process services firm in the world.
It competes with companies such as IBM Corp (IBM.N) and Accenture Plc (ACN.N) to provide services including business and IT consulting, systems integration, application development and maintenance and infrastructure management.
Clients range from businesses such as Vodafone Plc to (VOD.L) to the U.S. Department of Homeland Security.
Revenue from CGI’s Nordics, Southern Europe and South America (NSESA) division rose to C$511.2 million from C$10 million a year earlier due to the acquisition.
Logica’s market is concentrated in Sweden, Finland, Denmark, Norway, Portugal, Spain and Brazil, while CGI had operations in Spain and Portugal. Sweden and Finland accounted for 73 percent of CGI’s revenue from the NSESA region year-to-date.
The company also increased its annual savings target from the acquisition to C$375 million from C$300 million, and said it expects to generate the savings by the end of fiscal 2014, a year earlier than originally planned.
“The successful cost saving program should get CGI closer to C$3 per share in earnings about one year ahead of schedule,” National Bank Financial analyst Kris Thompson said in a note to clients on Tuesday.
CGI’s second-quarter net earnings rose to C$114.2 million, or 36 Canadian cents per share, from C$105.7 million, or 40 Canadian cents per share, a year earlier.
The stock was up 14 percent at C$30.89 at mid day on the Toronto Stock Exchange on Tuesday.
Reporting by Shounak Dasgupta and Krithika Krishnamurthy in Bangalore; Editing by Sreejiraj Eluvangal