(Adds comments from CEO interview)
By Allison Lampert and Alastair Sharp
MONTREAL/TORONTO, July 29 (Reuters) - CGI Group Inc
GIBa.TO , the information systems and management consultancy,
said on Wednesday it would target acquisitions in cyber security
while exiting some markets entirely, as it reported
third-quarter profit and revenue that missed estimates.
The chief executive of Canada's largest tech company called
cyber security a high-growth and high-margin sector that CGI is
already targeting with the recruitment of new workers.
"We are hiring people. The issue with that is that there are
not enough of them," CEO Michael Roach said in an interview at
CGI's Montreal headquarters.
"We're already very large in cyber but the rate of growth
there and the fact that it's globalized so rapidly means that
customers are looking for professional firms like CGI to help
them address the threat."
With demand boosted by high-profile incidents such as last
week's hacking of the cheating spouses website Ashley Madison,
cyber security was listed by CGI as one of the top five industry
trends identified through internal interviews with 1,000 clients
in 2015. ID:nL5N1014B9
Revenues generated from cyber security have yielded double
digit growth on a year-over-year basis, Roach said. He added
that cyber profit margins should be higher than those in most
other sectors after initial capital costs, such as investing in
new facilities, are sunk.
"It (cyber security margin) would be on the higher end over
time of the mix equation of a typical IT services company," he
said.
Roach said earlier today that CGI has compiled a short list
of 85 potential acquisition targets that would help it grow by
delving deeper into industries, three years after going wide
with its Logica acquisition at a price of 1.7 billion pounds
($2.65 billion) in 2012.
Roach said the company was getting out of or avoiding
low-margin markets in the Middle East and Latin America, with
the exception of Brazil, and that the U.S. utilities market was
underserved and represented an opportunity.
CGI said it signed C$2.2 billion in contracts in the period,
down from the C$2.5 billion a year ago.
Sales were hurt by the emerging market exits and by delays
in business with the U.S. federal and the UK governments.
Net income rose to C$257.2 million, or 80 Canadian cents per
share, in the three months to June 30, from C$225.1 million, or
71 cents a share, a year earlier. Revenue slipped 4 percent to
C$2.56 billion.
($1 = 0.6423 pounds)
(Editing by Jeffrey Benkoe)