Bloomberg News

McGraw Hill Profit Beats Estimates on Demand for Indexes, Platts

April 29, 2014

McGraw Hill Financial Inc. (MHFI:US), owner of the world’s largest credit rater, Standard & Poor’s, reported first-quarter profit that beat analysts’ estimates on demand for index licenses and research from data provider Platts.

Adjusted net income from continuing operations rose 9 percent to $248 million from a year earlier, the New York-based company said today in a statement distributed by PR Newswire. Earnings, excluding certain items, were 89 cents a share, exceeding the average estimate of 87 cents in a Bloomberg survey (MHFI:US) of 11 analysts.

McGraw Hill, along with competitors Moody’s Investors Service and Fitch Ratings, is benefiting after historically low borrowing costs spur debt sales that expanded the global bond market by 40 percent over six years to $100 trillion. Revenue at S&P has climbed annually since 2009. McGraw Hill, which reaffirmed its adjusted per share guidance of $3.75 to $3.85, reported revenue of $1.24 billion.

Sales at S&P, headed by Neeraj Sahai, increased 1 percent from a year ago to $569 million, according to the statement. Sahai took over from Douglas Peterson, who became chief executive officer Nov. 1 after Harold “Terry” McGraw III stepped down from the role.

Corporate bond sales in the U.S. slowed to $412.8 billion in the three months ended March 31 from $424.3 billion a year earlier, according to data compiled by Bloomberg.

“Difficult debt issuance comparisons during the quarter resulted in weakness in bond ratings revenue,” the company said in the statement.

Revenue at S&P Dow Jones Indices, which licenses benchmarks to investments including exchange-traded funds, increased 18 percent to $137 million. At Platts, which provides price data and analytics on commodities, revenue rose 14 percent to $148 million.

Sales at S&P Capital IQ, the financial data provider, advanced 4 percent to $301 million.

McGraw Hill shares, which climbed 43 percent in 2013, have slipped 4 percent to $75.07 this year, compared with the 1.1 percent drop in the Standard & Poor’s 500 Index.

Moody’s Corp., the company’s biggest competitor, reported earnings that beat analysts’ estimates April 25.

(McGraw Hill will hold a conference call for analysts and investors at 8:30 a.m. New York time. To listen, access the company’s website at {http://investor.mcgraw-hill.com})

To contact the reporter on this story: Matt Robinson in New York at mrobinson55@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net John Parry, Mitchell Martin


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Companies Mentioned

  • MHFI
    (McGraw Hill Financial Inc)
    • $84.45 USD
    • -0.36
    • -0.43%
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