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Mon, Nov 05, 2007 - Page 10 News List

Berkshire profit up 64 percent on sale of PetroChina stake

BLOOMBERG

Billionaire investor Warren Buffett's Berkshire Hathaway Inc said third-quarter profit surged 64 percent as it reaped an eightfold gain on a stake in PetroChina Co.

Net income rose to US$4.55 billion as investment gains increased more than tenfold to US$1.99 billion after taxes, the Omaha, Nebraska-based company said in a regulatory filing.

Berkshire began selling its 2.34 billion PetroChina shares as oil prices rose to records in the quarter.

Buffett, 77, is investing outside the US to spur growth at his US$200 billion investment and holding company as profit from insurance businesses wanes and the dollar weakens.

Israel-based subsidiary Iscar Metalworking Cos, acquired for US$4 billion last year in Buffett's first purchase of a non-US company, also boosted results. PetroChina rose more than eightfold since Berkshire's US$488 million investment in 2003.

"I don't think anybody's ever made much money betting against Warren Buffett and Berkshire Hathaway," said Frank Betz, who helps manage US$800 million, including Berkshire shares, at Carret Zane Capital Management in Warren, New Jersey.

"His investment in China was the big brass ring that he grabbed in this period."

Excluding investment gains, Berkshire's profit fell 1.4 percent to US$2.56 billion, or US$1,655 a share. Gary Ransom, an analyst at Fox-Pitt Kelton Cochran Caronia Waller had forecast US$1,477 a share because of the expected drop in insurance earnings, Berkshire's biggest business. Ransom rates the stock "in-line."

Buffett, ranked the world's third-richest man by Forbes magazine, transformed Berkshire from a failing textile maker into an enterprise with businesses ranging from ice cream and underwear to corporate jet leasing.

He has another US$60 billion for purchases, and said as recently as last week that he's "still negative" on the dollar and likes to get "foreign-exchange exposure through stocks."

"I'm looking all over the world," Buffett said at an Oct. 24 press conference at an Iscar factory in Dalian, China.

Berkshire rose US$1,250, or 1 percent on Friday, to end the week at US$132,500 in New York Stock Exchange composite trading, up 20 percent this year. Earnings were released after the close of US exchanges.

Dividends and interest from stocks and bonds and other investments by Berkshire's insurance companies rose 21 percent to US$922 million after taxes. The company typically gets about half its profit from insurance.

Underwriting profit from units including National Indemnity Co and Geico Corp tumbled 47 percent to US$486 million. Buffett has told investors not to expect a repeat of the US$3.8 billion in insurance earnings last year when the company charged record rates a year after Hurricane Katrina. Falling prices after a calm hurricane season last year led Berkshire to scale back catastrophe coverage this year.

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