CGI on track as IT deals grow: CEO

MONTREAL • Despite global business tensions, companies will continue to invest in technology and

CGI Group Inc. is wellpositioned to take advantage of the growing market, chief executive George Schindler said Wednesday.

In his view, both consumers and other citizens want access to a more digital experience, prompting companies and governments to take action.

“This is really not a situation where they can decide not to invest,” Schindler said during a conference call to discuss CGI’s fourth-quarter results which topped expectations and boosted its share price on the Toronto Stock Exchange.

Spending on technology and use of outsourcing are expected to increase over the next three years, according to estimates from the information technology and consulting firm.

Last year, CGI conducted a survey that suggested 40 per cent of companies wanted digital strategies for all of their businesses, compared to 12 per cent the year before. The survey involved 1,300 business people and leaders, as well as government representatives in 17 countries. Canadians accounted for 15 per cent of respondents.

“In many cases, we find that companies are now changing their business through IT projects, not the other way around,” Schindler said.

He said new technologies, such as massive data analysis and automation, are shaking up business models and stimulating spending.

CGI ended the year on a high note with earnings above expectations in the fourth quarter, during which profits and revenues increased.

Investors reacted favourably, as shares climbed 3.93 per cent to $82.23 in earlyafternoon trading. CGI closed at $81.47

For the three-month period ended Sept. 30, the Montreal-based company posted net earnings of $293.5 million, or $1.03 per share, a 40 per cent increase over the same period in 2017.

Quarterly revenue reached approximately $2.8 billion compared to $2.61 billion in the fourth quarter last year.

“The company reported constant-currency revenue growth of five per cent yearover-year, above our estimate of 4.1 per cent year over year, mostly due to strongerthan-expected revenues in Europe and Canada,” said Maher Yaghi of Desjardins Capital Markets in a note.

Excluding non-recurring items, including a $22-million restructuring charge, adjusted fourth-quarter earnings increased 12.4 per cent to $309.8 million or $1.09 per share.

The performance exceeded expectations of analysts polled by Thomson Reuters, who forecast adjusted earnings per share of $1.07.

“We continue to see a market climate conducive to achieving our strategic aspirations of doubling CGI over the next five to seven years,” Schindler told analysts.