Acquisitions Boost Sales at MHC
by Jim Milliot -- Publishers Weekly, 2/4/2002
Helped by sales of $318 million generated by the companies acquired in the purchase of Tribune Education, revenues in McGraw-Hill's education group rose 16.5% in 2001, to $2.3 billion. Operating profit fell 14.4%, to $263.4 million, a figure that includes a $62.1-million write-down related to the reorganization of the education group announced in December (News, Dec. 17). Excluding the write-off, which involved severance for 575 employees, operating profit was up 5.8%, to $325.5 million.Revenues in the school education group, which serves the elhi and children's publishing markets, rose 24%, to $1.4 billion. The group's elementary school publisher, Macmillan/McGraw-Hill, did well in reading, social studies and language arts adoptions, but had a disappointing performance in the California math and science adoptions. Glencoe/McGraw-Hill, the company's secondary-school publisher, had a good response to its literature program and continues to do well in social studies, language arts and health. The testing unit, CTB/McGraw-Hill, had an "excellent" year, the company said.
MHC noted that the former Tribune Education products had mixed results within the school education group. Programs that were transferred to different education divisions had gains, but products that became part of the new children's publishing division declined.
In the higher education, professional and international group, revenues rose 7%, to $942 million. The higher education division was the group's strongest performer, with sales up by more than 10% and gains across the board. Revenues in the professional division, bolstered by NTC products and gains in the scientific, technical and medical fields, rose in the year, but earnings were hurt by a "substantial" decline in computer book sales. The international operation was also negatively affected by declines in computer book sales, and reported soft sales in the Spanish-language market. As a result, gains in the Asia-Pacific region and Canada were offset by weaknesses in Latin America.
Looking at 2002, MHC chairman Terry McGraw said he is expecting a strong year from the group's higher education and testing divisions and a better year from its supplementary division. McGraw expects the computer book market to improve slightly in the year, although he noted the segment was "still soft," and that while there has been some pickup in sales "it hasn't been material." McGraw also said that the company will continue to remain aggressive on the acquisition front, looking to add scale to its educational publishing activities.
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