Revenues of McGraw-Hill Companies for the nine months ending September 30th, 2009 declined by 9.1%.  Operating income was down by 14.8%.

Revenues in Education services declined by 12.4%; S&P’s revenues declined 5.4% and Information and Media services declined by 9.7%.   Due to continuing weak market conditions in education and advertising, management expects total revenues for 2009 to decline by 7% versus a previously forecasted 5.5%.

Outlook: With market conditions continuing to weaken in school education and advertising, the company now expects revenue for 2009 to decline by approximately 7%.  It had previously forecasted a decrease of 5.5% to 6.5%. Financial Services: Revenue for this segment declined 2.2% to $637.0 million in the third quarter compared to the same period last year. Operating profit decreased by 10.1% to $256.2 million compared to $285.1 million for the third quarter last year, which included a pre-tax restructuring charge of $4.1 million. Foreign exchange rates reduced revenue in the third quarter by $10.1 million and operating profit by $3.1 million.

An improving financing environment for bond issuers and narrowing credit spreads contributed to an uptick in revenue for Standard & Poor’s Credit Market Services in the third quarter. S&P Credit Market Services increased revenue by 0.7% to $426.1 million in the third quarter compared to the same period last year. Revenue for Standard & Poor’s Investment Services declined 7.6% to $210.9 million in the third quarter compared to the same period last year.

Information & Media: Revenue for this segment declined 10.1% to $238.9 million compared to the same period last year. Operating profit increased by 29.3% to $29.5 million versus $22.8 million last year, which included a pre-tax restructuring charge of $13.9 million. Foreign exchange rates had an immaterial impact on revenue and a $1.7 million favorable impact on operating profit.

Education Services: McGraw-Hill disclosed that revenue for the McGraw-Hill School Education Group declined 19.6% to $501.3 million in Q3.  While traditional education services are declining, the good news is in the college and digital markets for McGraw.  They forecast a revenue increase of 8-10% from colleges and universities.  Online study tools for students produced double digit increases. 

Lisa Abrams, Affiliate Analyst of Outsell, Inc. reports in her latest Outsell Insight:  “McGraw-Hill expects the recovery to be more sluggish than previously expected.  Although there is softening in the education division that will contribute to a decrease in expected full year revenue, there are definite bright spots in the education segment that bode well for the division’s future.”

Sources: McGraw-Hill Company press release and Outsell Inc.

BIIA Newsletter November – December 2009 Issue