The credit ratings and publishing businesses are two industries that have certainly seen better days. That's not good news for McGraw-Hill Cos. Inc., the owner of Standard & Poor's and publisher of BusinessWeek.
The New York-based IW 50 Best Manufacturer for 2008 said July 29 that second-quarter profit fell 23.4% to $212.3 million and revenue dropped 2.6% to $1.7 billion from the year-earlier period. The results include a pre-tax restructuring charge of $23.7 million, or 5 cents per share, for severance costs after the company cut 395 jobs.
The company's financial services segment took the biggest hit with revenue declining 10.4% to $735.5 million. This includes a 20% drop in revenue for S&P's credit-market services, which provides credit risk evaluations and ratings-related information and products.
At A Glance
McGraw-Hill Cos. Inc.
New York, N.Y.
Primary Industry: Publishing & Printing
Number of Employees: 21,171
2007 In Review
Revenue: $6.8 billion
Profit Margin: 14.97%
Sales Turnover: 1.07
Inventory Turnover: 7.51
Revenue Growth: 8.27%
Return On Assets: 16.77%
Return On Equity: 37.83%
The revenue decline was partially offset by gains in the company's investment services and educational offerings. Investment services revenue rose 22.8% to $227.6 million. In the education segment, revenue increased 3.6%, driven by growth in the K-5 market. Recent adoption of instructional materials standards in Florida and Texas have boosted sales, says Harold McGraw III, chairman and CEO.
"Despite concerns about the economy in many states, a robust state new adoption market is shaping up this year, and we are now on course to capture about one-third of the total available dollars," McGraw said. "We estimate that the total state new adoptions this year will be worth $900 million to $950 million compared with about $820 million in 2007."
Information and media revenue grew 6.8%, as the company's energy news and pricing resource Platts gained new subscribers. However, advertising pages for BusinessWeek declined 11% in the second quarter, said McGraw-Hill, citing the Publishers Information Bureau.
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