Driven by a 5.8% increase in its higher education, professional and international group (HPI), total revenue at McGraw-Hill Education rose 2%, to just over $1 billion, and operating profit increased 9.1%, to $323.3 million, in the third quarter ended September 30. Sales in the HPI group rose to $452.6 million, offsetting a 1% sales decline in the school group, to $552.7 million.
Terry McGraw, chairman of MHE parent company McGraw-Hill Cos., said the company's college operation had a successful third quarter, led by sales in the business and economics categories. Sales were also up in the science, engineering, math, humanities and social sciences segments. Sales were soft in MHE's Spanish-language publishing operations, and sales of computer books fell again.
McGraw said for-profit higher education schools, such as Phoenix Learning, continue to be a fast growing market for college texts. International sales were also up. McGraw predicted that MHE's higher education division will do better than the 2% to 3% growth projected for the entire college market.
The drop in school group sales was due to a 30% reduction in state adoption opportunities, McGraw said. MHE's reading and testing divisions have benefited from the No Child Left Behind Act, and McGraw said he expects funds from the program to continue to reach the market in 2005. In addition to more NCLB dollars, an increase in textbook adoptions to more than $900 million next year should result in good gains for MHE's school unit in 2005, McGraw said.
For the first nine months of 2004, operating profit at MHE rose 10.6%, to $311.5 million, on a 1.4% revenue gain, to $1.81 billion.
