No Surprises in the Cards at McGraw-Hill's S&P Unit
At the UBS Warburg media week conference, Harold (Terry) McGraw, the chairman, president and chief executive officer of The McGraw-Hill Companies reviewed prospects going into 2004. My main interest is in the financial services area, primarily Standards & Poor�?�s. There were no surprises. For the first nine months of 2003, financial services revenues rose 11 percent to $1,274 million from $1,148 million in the first nine months of 2002. Operating profits for the unit were $488 million compared with $413 million in 2002, an increase of 18 percent. Operating profit margins for the nine months were 38 percent compared with 36 percent in the same year-earlier period. Mr. McGraw said Standard & Poor's will turn in double digit growth in both revenues and profits this year and will repeat that in 2004 although the percentage growth next year won't match that of this year. Margins are expected to remain the same. The unit will live with an expected sharp downturn in the issuance of mortgage-backed securities in 2004. International revenues, now a third of the total, will increase in 2004 and will get to 40 percent over the next several years. Mr. McGraw said delayed budget reviews for this year make for a cloudy crystal ball looking into next year for the company as a whole, but he tossed out a forecast of earnings growth in the high single digits.