CGI optimistic about Trump’s new spending priorities

MONTREAL — IT company CGI Group sees opportunities to profit from promised spending and tax changes by the new Trump administration.

Chief executive George Schindler told analysts Wednesday the Montreal-based company is wellpositioned to benefit from expected increases in government spending on defence and intelligence agencies.

While there’s uncertainty over spending in U.S. domestic departments such as the Environmental Protection Agency and Health and Human Services, Schindler says CGI no longer has any significant exposure to Obamacare, which is under threat of repeal.

Nearly 14 per cent of the company’s revenues in the first quarter came from the U.S. federal government and 27 per cent in the United States as a whole.

CGI was recently awarded a contract from the Department of Homeland Security to provide identification management services for 27 federal agencies.

With 11,000 employees in the States and six call centres employing American workers, Schindler says the company is less affected by visa challenges that affect many of its competitors.

It also sees a promised tax cut from its current rate of 40 per cent to as low as 15 per cent having major repercussions on its net profits.

In advance of those promised reductions, CGI says it’s seeking acquisitions in the United States.

CGI says it’s also optimistic about opportunities in Britain, despite delays of some large contracts caused by uncertainty over the country’s withdrawal from the European Union. The company says its net profit increased 16 per cent in the first quarter despite currency fluctuations.