Restructuring costs ding McGraw-Hill 3Q net
NEW YORK (AP) — The McGraw-Hill Cos., an education and financial information company that owns the Standard & Poor's corporate credit rating firm, said Friday its third-quarter net income fell 14 percent, pulled down by costs related to the planned spinoff of its education division and cost-cutting efforts.
But the New York-based company lifted its profit prediction for the year as the strengthening global bond market lifts S&P. Rival Moody's Corp. last week also lifted its year guidance because of a better corporate debt market.
McGraw-Hill earned $314 million, or $1.10 per share, down from $366 million, or $1.21 per share, in the same quarter last year. Excluding $99 million in restructuring charges, McGraw-Hill posted an adjusted profit of $1.33 per share for the recent quarter.
Analysts, on average, expected a profit of $1.30 per share, according to a FactSet poll.
The better-than-expected results stemmed from the company's financial division, which includes the S&P ratings service. Revenue rose 15 percent to $1.12 billion in the division, with the ratings services' revenue jumping 22 percent to $502 million.
In the education business, meanwhile, revenue fell 11 percent to $836 million. The company cut expenses 9 percent as it faced a declining market. U.S. public schools have been hit with budget cuts in the wake of the recession.
McGraw-Hill wants to split its company in two, with a spinoff or sale of its education unit this year. The remaining company, to be called McGraw-Hill Financial, would include its Standard & Poor's Ratings Services, the S&P index business and others. The company said Friday that it continues to evaluate its sale and spinoff options, with a final decision expected to be made in the coming weeks.
Ahead of the planned split, McGraw-Hill is pushing to cut costs.
Revenue at the whole company rose 2 percent to $1.95 billion from $1.91 billion, slightly below analysts' predictions of $1.98 billion.
McGraw-Hill lifted its 2012 adjusted profit forecast to $3.35 to $3.40 per share from a previous prediction of $3.25 to $3.35 per share. Analysts expect a profit of $3.40 per share.