McGraw Hill Financial Inc reported a better-than-expected quarterly profit, helped by cost cuts and growth in its Standard & Poor's ratings service business as more high-grade bonds were issued. The company also said a reduction in headcount was the primary contributor to its improved performance.
Expenses at S&P ratings services fell 4.2 percent to $315 million in the first quarter ended March 31 from a year earlier. Over all expenses declined 1 percent to $772 million. Revenue from the ratings business, McGraw Hill Financial's largest, rose 6.5 percent to $606 million. Total revenue rose 6.4 percent to $1.27 billion.
"The recent trends in US and European issuance have benefited our businesses" Chief Executive Doug Peterson said on a post-earnings call with analysts. The improvement in US corporate issuances was largely due to a rise in industrial offering, Peterson said. High-grade US corporate debt offerings jumped 8 percent to $341.9 billion in the first quarter from a year earlier, marking the strongest three-month period for the asset class since records began in 1980, according to Thomson Reuters data.
McGraw Hill paid nearly $1.5 billion in the quarter to settle a collection of lawsuits over its ratings on mortgage securities that soured in the run-up to the financial crisis. Revenue from all the company's businesses grew at single-digit percentages despite the impact of strong dollar, Peterson said in a statement. The dollar has gained about 22 percent in the past 12 months against a basket of major currencies. McGraw Hill, whose rivals include Moody's Corp's Moody's Investors Service and Fitch Ratings, earned $1.09 per share from continuing operations on an adjusted basis. Analysts on average had expected earnings of $1 per share, according to Thomson Reuters I/B/E/S.
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