Sales and earnings both fell at McGraw-Hill Education in the second period ended June 30 with revenue down 5%, to $536.6 million, and operating profits off 18.3%, to $42.2 million. The sales decline came entirely in the school group where sales decreased 10.1%, to $292.2 million. Sales in the higher education/professional/international group rose 1.8%, to $244.4 million.
MHE said gains in the higher education/professional/international group were spurred by increased investments, digital products and digital subscription Web sites that produced strong double-digit growth in higher education and professional markets. In the higher education segment, the continued success of digital products was key to a modest gain in the U.S. college and university market, MHE reported, with a good response to the homework management and study system McGraw-Hill Connect. In professional publishing, the double-digit growth of digital products and services offset softness in traditional retail channels. Digital products launched in the second quarter included AccessPediatrics, a new specialty site which joined the AccessMedicine suite of digital subscription products and the McGraw-Hill eBook Library, a global platform offering institutional and individual customers unlimited concurrent access to more than 1,000 e-book titles in medicine, business, and engineering/computing, along with student study skills and test preparation. MHE also released 25 mobile apps in the quarter, bringing the total apps available for purchase to 177.
Revenue in international markets was up modestly, the result of favorable foreign exchange rates and higher sales in India, Africa and Canada, which were partially offset by slower sales in Asia.
MHE blamed the decline in the school group primarily on delayed orders, particularly in Texas, and strong sales in last year’s second quarter. A number of states and districts began ordering again in the third quarter.
For the first half of 2011, total MHE revenue was down 4.9%, to $839.3 million, and the company had an operating loss of $33.3 million compared to a loss of $10.2 million in the first half of 2010.
