With sales in its school group down 19.6%, to $501.3 million, revenue at McGraw-Hill Education fell 11.6%, to $1.0 billion, in the third quarter compared to the same period last year, and operating profit decreased 15.9%, to $298.1 million. Sales in the higher education/professional and international group fell less dramatically than the school segment, off 1.8%, to $498.7 million. Foreign exchange rates reduced revenue by $11.4 million and operating profit by $4.9 million.
Parent company McGraw-Hill Cos. blamed the decline in the school group on the recession that resulted in several large states postponing adoptions, including California and Florida. Postponement’s also occurred in several smaller states including Kentucky and Oregon, as well as in open territories. MHE estimates that sales for the entire elhi market will decline between 20% and 25% in 2009. AAP estimates through August show sales from eight elhi publishers down 21%.
For the McGraw-Hill higher education/professional/international group, growth in the U.S. college and university market was offset by foreign exchange, softness in international markets and continued weakness at bookstores. The college market is benefitting from a substantial increase in enrollments, and MHE’s college division has had success with several digital initiatives and solid performances from its major imprints MHE reported that online study tools for students, e-books, and online courses all produced double-digit increases. Although professional markets were soft at retail, subscriptions for digital products in science, medicine and technology grew at a double-digit rate. International revenue decreased in the third quarter, with strong demand for higher education products across most markets offset by lower school sales in some regions as well as softness in professional sales and the unfavorable impact of foreign exchange.
For the first nine months of 2009, operating profit at MHE declined 27.4%, to $242.5 million on a 12.4% decline in sales, to $1.87 billion. Earning in both 2008 and 2009 include restructuring charges.