CGI reports 2006 2Q earnings and future growth strategy

CGI Group Inc., an IT and business process service firm, has reported second quarter net earnings of US$14.1 million, or 4 cents a share on revenues of US$866.8 million.
Included in the quarter’s results were pre-tax restructuring costs related to specific items of US$31.3 million, or 6 cents a share, the company reported in a press release. “Before these costs, CGI net earnings would have been US$34.7 million or 10 cents per share. Contract bookings during the second quarter totaled US$1.75 billion.”
In late March, CGI announced approximately 1,000 employees, primarily from the company’s Montral and Toronto locations, would lose their jobs in 2006 as a result of the lower-than-expected business from Bell Canada.
At the same time, CGI announced it would create 400 new jobs, with 200 of those jobs coming from the opening of new ‘Centres of Excellence’ in Atlantic Canada.
“This quarter was a repositioning of our company for the next wave of profitable growth,” Michael E. Roach, CGI’s president and CEO, said in a press release. “Given the impact of a sharper than expected sequential decline in business from BCE, the restructuring program related to specific items announced last month was a necessary action to ensure that our business remains solid as we continue aggressively pursuing a robust funnel of opportunities in each of our selected verticals,” Roach said. “Our financial situation remains healthy, with the balance sheet and cash
flows to support our Buy and Build growth strategy.”
Prospects in both the commercial and public sectors of the U.S. look especially strong over the coming quarters, the company reported in its release. In particular, the company signed a seven-year business process services deal with Universal Insurance valued at between US$45-US$75 million to process Universal’s book of business.
In Canada, CGI has a $90-million, seven-year infrastructure management contract with Royal & Sun Alliance Insurance Company of Canada.
CGI’s 2006-08 business plan reaffirms plans to expand in the United States through acquisitions. “While CGI already has critical mass in its main geographies, it will continue to increase its presence through acquisitions in selected metropolitan markets where it sees the greatest potential to drive organic growth,” the company reported in a release.