Sales at McGraw-Hill Education fell 2.1% in the second quarter ended June 30, to $531.7 million, although operating profit rose 2.6%, to $57.1 million. A 7.2% sales increase, to $191.5 million, in the higher education, professional and international group helped offset a 6.7% decline in sales, to $340.2 million, in the school education group.
The sales gain in the HPI group was led by improved sales in its core higher-education programs, and Terry McGraw, chairman of MHE parent company McGraw-Hill Cos., said he expects a "big year" for business and economic titles in the U.S. The international market also had solid gains in the quarter, driven by higher sales of Spanish-language products in Mexico, Argentina and Spain. In the professional segment, soft sales of computer and technology books were offset by increases in the business, general reference and medical segments.
The sales decline in the school group was attributed to a 30% reduction in adoption opportunities this year. Despite the decline in sales, McGraw said, financial news from the states "is more encouraging" at this point than the company had expected, which should result in a 5.9% increase in educational funding for the fiscal year that began July 1.
For the first six months of 2004, MHE reduced its operating loss from $14.5 million to $11.5 million on a 0.6% sales increase, to $809.9 million. Sales in the HPI segment were up 6% in the period, and McGraw said the company expects MHE's higher education group to outperform the projected 2%—3% increase in industrywide college sales. Revenue in the school group was down 3% at the midpoint of 2004, and McGraw expects the unit to do better than the 5% decline in sales projected for the entire market.
