Profits Jump at McGraw-Hill on 7% Sales Gain
By Jim Milliot -- Publishers Weekly, 1/24/2008 6:34:00 AM
Total revenue at McGraw-Hill Education rose 7.2%, to $2.70 billion, in 2007, with operating income jumping 21.5%, to $400 million. Profits in the year include a $16.3 million charge to account for the elimination of 304 jobs. Sales in the school education group rose 6.8%, to $1.4 billion, which the company attributed to a strong performance in adoption markets. MHE estimated that it captured 32% of adoption sales in the year in the K-12 markets, which company chairman Terry McGraw said underscores the successful integration in 2006 of the elementary and secondary group, a move that cut about 400 jobs. The strong gains in adoption states helped to offset soft market conditions in both open territories and the supplementary market.
Sales in the higher education/professional/international group increased 7.6% last year, to $1.3 billion. Sales in college and university markets were up in the U.S. and abroad and sales increased in the professional publishing segment as well. College sales benefited from sales of digital products plus solid gains in economics, accounting, management, biology and math. In the professional market, the sales leader was the 10th edition of McGraw-Hill Encyclopedia of Science and Technology. Medical and business titles also sold well.
The company said it expects sales at MHE to grow in the 6% to 8% range in 2008, while profits will grow in the low single digit range. The slow profit growth was attributed to increase in prepublication amortization and stepped up investments in technology to accelerate the transformation of products from print to digital.
