Berkshire Q3 profit up 29 percent; operating results miss

By Jonathan Stempel and Luciana Lopez

REUTERS - Warren Buffett's Berkshire Hathaway Inc posted a 29 percent jump in third-quarter profit as it recorded big gains on investments made during the financial crisis, but operating results missed forecasts amid weakness in insurance operations.

Quarterly results included $1.4 billion of gains from investments that Buffett made in October 2008, including in General Electric Co and Goldman Sachs Group Inc warrants, and bonds related to candy maker Mars Inc's purchase of rival Wrigley.

Such investments helped give Buffett a reputation as a lender of last resort.

But investment and derivative gains do not factor into operating results, and while profit rose at Berkshire's Burlington Northern Santa Fe railroad and MidAmerican energy and utility units, insurance underwriting results deteriorated.

Net income rose to $5.05 billion, or $3,074 per Class A share, from $3.92 billion, or $2,373 per share, a year earlier, Berkshire said on Friday.

Operating profit rose just 8 percent to $3.66 billion, or $2,228 per Class A share, from $3.4 billion, or $2,057 per share. Analysts on average expected $2,402 per share, according to Thomson Reuters I/B/E/S.

Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, which invests $1.3 billion and owns Berkshire stock, said the company can boost investment results if bond yields rise once the U.S. Federal Reserve pulls back on efforts to prop up the nation's economy.

"The U.S. economy is rather stumbling, and that is positive actually for their infrastructure investments such as railroads," he said. "All things considered, we are fairly pleased with the results."

Book value, Buffett's preferred measure of the Omaha, Nebraska-based company's worth, rose 11 percent this year to $126,766 per Class A share as of September 30, 2013.

INSURANCE WEAKENS

Net insurance underwriting premiums fell 57 percent to $170 million. Results weakened at the Geico auto insurance unit, which paid out a higher percentage of premiums to cover claims than a year earlier, and the General Re reinsurance unit, which had a $400 million underwriting loss from a European hailstorm.

In addition, Berkshire's main reinsurance business sustained a $206 million pre-tax underwriting loss, hurt by lower premiums and currency fluctuations.

Profit rose about 6 percent at Burlington Northern to $989 million, as higher shipments of industrial products, consumer products and coal offset a drop for agricultural products amid lower grain exports and strong global competition.

Results also improved in businesses such as the Forest River recreational vehicle unit. Revenue from jewelry, home furnishings and other retail businesses rose 18 percent.

Bill Smead, chief executive of Smead Capital Management in Seattle, which invests 3 percent of its $700 million of assets in Berkshire, said the 83-year-old Buffett is setting up the company to perform over the long haul.

"He's making a big push into almost everything associated with the idea that we'll build a lot more homes in the next 10 years," Smead said.

Berkshire ended the quarter with $42.08 billion of cash and equivalents, giving Buffett the firepower to make one or more large acquisitions, which he calls "elephants."

The second-richest American wants to keep about $20 billion in cash, in part for possible insurance payouts on storms.

Berkshire bought $1.77 billion worth of stock during the quarter but sold $1.48 billion, and was actually a bigger net purchaser of bonds than stocks.

Buffett has run Berkshire since 1965, favoring businesses with consistent earnings power. Berkshire now has more than 80 businesses, though it remains best known for insurance.

He spent $12.3 billion in June to buy part of ketchup maker H.J. Heinz Co. Berkshire also owns $104.9 billion in equities, including such stocks as Coca-Cola Co , International Business Machines Corp and Wells Fargo & Co .

In Friday trading, Berkshire Class A shares closed up $127.70 at $173,122.50, while its Class B shares rose 19 cents to $115.27. Berkshire released results after U.S. markets closed. Its B shares fell 0.7 percent to $114.51 after hours. (Reporting by Jonathan Stempel, Jennifer Ablan and Luciana Lopez; Editing by James Dalgleish, Leslie Gevirtz, Andrew Hay and Bob Burgdorfer)

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Dhanteras gold demand falls at least 20 percent this year

New Delhi/Chennai/Mumbai, Nov 1 (IANS) Come Dhanteras and Indians are ready to shell out that extra bit to purchase gold on the auspicious day. But demand has fallen by at least 20 percent this time as most people have made the bulk of their purchases earlier in the year when prices were much lower, say market cognoscenti on the occasion of the festival Friday.

"Though people are coming to the shops but overall sales are low. Demand has fallen by 20 percent in Delhi this year during Dhanteras as many people have bought gold during April-May when the price fell considerably to around Rs.25,000 per 10 grams," Rahul Gupta, chief executive officer of PP Jewellers told IANS. Gold currently retails at around Rs.32,000 per 10 grams in Delhi.

Gupta also mentioned that there is supply crunch in the market after the government hiked the duty on gold to 15 percent to curb its import as it was causing an imbalance in the current account deficit.

Dhanteras comes on the 13th day of the dark fortnight in the Kartik month (according to Hindu calender). It is also the day for celebrating wealth as the word 'Dhan' literally means wealth and 'Tera' comes from the date 13th.

Dhanteras holds special significance for the business community due to the customary purchases of precious metals on this day.

Jayantilal Challani, president of Madras Jewellers and Diamond Merchants Association and a partner in Challani Jewellery Mart told IANS: "Sales volume is certainly down atleast by 30 percent as per our information. The footfall in the shops are high but per ticket sales volume is low across the country is what we hear."

Even N. Anantha Padmanabhan of NAC Jewellers told IANS: "Sales are expected to be good today. But they will be down by 30-40 percent as compared to last year."

Though inflation and high prices of gold restricted the buyers, overall the market recorded between 50-60 percent sales as compared to last year, Ashok Minawala, former chairman of Gems & Jewellery Trade Federation said in Mumbai.

"As always, gold continued to be popular with the people and despite the drop in volume sales as compared to last year, the market is happy," Minawala explained.

Surprisingly, this year middle-end diamonds and diamond jewellery found takers, especially in the Rs.50,000-150,000 range, he added.

Another expert and former chairman of All India Gems & Jewellery Federation Bachharaj Bamalwa said the slight fall in the price of the precious yellow metal in the international markets Thursday had contributed to the positive mood among the buyers.

However, Gora Roy Chowdhury, director of Kolkata's MP Jewellers, felt customers are confused about the gold industry and that is definitely impacting sales by 30-35 percent this Dhanteras.

"The price volatility is definitely impacting the people, coupled with various freebies offered by many jewellers along with gold. People are confused and they often don't understand which product to go for - gold or freebies," Roy Chowdhury told IANS.

He rued the fact that nowadays people do not buy gold with seriousness of owning a jewellery. "They buy it for the sake of buying and are more attracted towards the freebies."

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Jet fuel prices cut by 4.51 percent

New Delhi, Oct 31 (IANS) India's largest fuel retailer Indian Oil Thursday announced a 4.51 percent cut in the price of jet fuel in New Delhi region, effective from midnight Thursday.

According to IOC, the air turbine fuel (ATF) will cost the airlines 4.51 percent less at New Delhi, which comes to Rs.73,607.26 per kilolitre from Rs.77,089.42 per kilolitre.

The fuel price difference in other major cites will be decided by factoring in the state tax regimes applicable there.

The reduction came after the three state-owned oil marketing companies (OMCs), which revise jet fuel prices on the first day of every month, had hiked fuel prices by 6.9 percent for purchases from Sep 1.

This was the fourth hike since June due to the fall in rupee value. The increase in ATF prices last month had led to three airlines namely Air India, Jet Airways and budget passenger carrier SpiceJet to increase fares by 25 percent.

Fuel prices are a determining factor in the tough Indian aviation sector as the cost comprises about 50 percent of the total operating costs of an airline.

High prices have dented the sector as major airlines bleed under the high state sales tax regime which ranges from 4-34 percent.

Currently, ATF sold in the country is nearly 50-60 percent costlier than in overseas markets like Bangkok, Singapore or Dubai.

There has been a longstanding perception that ATF, which is a super-refined form of kerosene, should not be subsidised for air travel.

The government currently subsidises sensitive products like diesel, LPG (liquefied petroleum gas) cylinders and kerosene.

Currently, the central government is trying to get the fuel as a notified category item. Once listed as a notified product or a declared good under the Central Sales Tax (CST) Act, airlines will only have to pay a uniform sales tax of four percent.

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Lupin Q2 net up 40 percent to Rs.406 crore

Mumbai, Oct 30 (IANS) Drug maker Lupin saw its consolidated net profit rising 39.8 percent in the second quarter to Rs.406.20 crore, driven by other income, despite higher tax rate.

Consolidated revenue of the company grew 16 percent year-on-year (Y-o-Y) to Rs.2,668 crore in quarter ended September 2013, supported by formulations business and strong growth US, Europe and Africa, the company said in a release.

"Despite challenges in markets like India, we have had a good first half, driven by strong business growth from markets like US and improved operational efficiencies... This consistent performance has led to a sustained EBIDTA and PAT improvement," Nilesh Gupta, managing director, said.

Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 27.9 percent Y-o-Y to Rs.660 crore and operating profit margin expanded 230 basis points Y-o-Y to 24.7 percent in the quarter gone by.

Formulations business of the company grew 17 percent while Active pharmaceutical ingredient or API (drug raw material) shot up 20 percent Y-o-Y.

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RBI hikes repo rate by 25 basis points, CRR unchanged at 4 percent

Mumbai, Oct 29 (ANI): The Reserve Bank of India (RBI) on Tuesday hiked the short-term lending (repo) rate by 0.25 percent to 7.75 percent.

This move of the central bank will make corporate and consumer loans more expensive.

RBI Governor Raghuram Rajan brought down the cost of short-term funds for banks by slashing the marginal standing facility (MSF) rate by a similar quantum to 8.75 percent.

Rajan said the policy stance and measures are intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth.

"These will help strengthen the environment for growth by fostering macroeconomic and financial stability. The Reserve Bank will closely monitor inflation risk while being mindful of the evolving growth dynamics," he said.

The RBI reduced the growth forecast for the current fiscal to 5 percent from 5.5 percent projected earlier.

The central bank left other rates unchanged, such as the Cash Reserve Ratio (CRR) at 4 percent, and Mandatory holdings in government securities and other liquid assets as a solvency measure (SLR) at 23 percent. (ANI)

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RBI hikes repo rate by 0.25 percent; cuts rupee support

Mumbai, Oct 29 (IANS) The Reserve Bank of India (RBI) Tuesday hiked a key policy interest rate by 0.25 percent in less than two months that would make home, auto and other loans costlier and eased the rupee support measures.

In its second quarter review of the monetary policy for 2013-14, the RBI hiked repo rate by 25 basis points or 0.25 percent to 7.75 percent. Repurchase or repo rate is the rate of interest that banks pay when they borrow money from the central bank to meet their short-term fund requirement.

This is the second increase in the policy rate in less than two months. The central bank had also hiked the repo rate by 0.25 percent in its previous review announced Sep 20.

Taking cues from the stability in the currency markets, the RBI rolled back some of the measures put in place to support rupee. The Marginal Standing Facility (MSF) rate is reduced by 0.25 percent to 8.75 percent. The move will ease liquidity in the banking system. MSF is a window for banks to borrow from the RBI.

"With the reduction of the MSF rate and the increase in the repo rate in this review, the process of re-aligning the interest rate corridor to normal monetary policy operations is now complete," RBI Governor Raghuram G. Rajan said in the policy statement.

The RBI generally maintained a 100 basis points gap between repo and MSF rate. But this gap was altered recently to support the battered rupee. With the changes now the gap is back to the usual 100 basis points.

Rajan said the policy stance and measures in the review were intended to curb mounting inflationary pressures and manage inflation expectations in a situation of weak growth.

"These will help strengthen the environment for growth by fostering macroeconomic and financial stability. The Reserve Bank will closely monitor inflation risk while being mindful of the evolving growth dynamics," he said.

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Hero MotoCorp Q2 net profit rises 9 percent

New Delhi, Oct 23 (IANS) Two-wheeler maker Hero MotoCorp Wednesday reported a 9.07 percent increase in its second quarter net profit which stood at Rs.481 crore from Rs.441 crore in the corresponding quarter of the 2012-13.

The company's turnover which includes proceeds from net sales and other operating income rose by 10.39 percent to Rs.5,726 crore from Rs.5,187 crore reported in the second quarter of last fiscal.

The firm's EBIDTA (earnings before interest, tax, depreciation and amortisation) margin stood at 14.5 percent. Sales during the quarter under review stood at 1,416,276 units.

"With our performance in the second quarter, we have clearly demonstrated that we can have good margins even as we strengthen our market leadership," said Pawan Munjal, managing director and chief executive, Hero MotoCorp said in a statement.

"Rupee depreciation has pulled up the costs of essential commodities. Going forward, these higher input prices, combined with increasing labour costs, are likely to put a lot of pressure on margins in the industry."

The company said that it is hopeful of achieving healthy sales during the ongoing festive season.

"Sentiments are positive and there is a momentum for us in the market, and we are definitely looking at demonstrating our leadership by record dispatch and retail sales during the festive period," Munjal added.

Recently, the two-wheeler manufacturer unveiled 15 new models of its motorcycles and scooters which will be launched during the current fiscal.

The company is also trying to spur up its in-house technology development at its research and development (R&D) centre and has also tied up with three international companies for technology alliances.

Hero MotoCorp can use erstwhile partner Honda's technology inputs till 2014. Both the companies ended there 27-year-old joint venture two years ago.

The two-wheeler major which is currently on an international expansion drive after ending its JV with Honda, hopes to enter markets in Turkey and Egypt soon.

In the short-term, the company plans to launch its brand of products in 10 more international markets by the end of this year.

In the long term, the company envisions an annual production capacity of 12 million units per year manufactured in over 20 facilities across the globe.

The company also aims to have a turnover of Rs.60,000 crore per annum by 2020 from last fiscal's turnover of around Rs.25,000 crore.

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HDFC profit rises 10 percent to Rs.1,266 crore

Mumbai, Oct 21 (IANS) India's largest mortgage lender Housing Development Finance Corporation (HDFC) Monday said its net profit rose by 10 percent to Rs.1,266.33 crore in July-September quarter.

The company's total income rose to Rs.5,953.98 crore for the quarter ended Sep 30, as compared to Rs.5,277.2 crore recorded in the corresponding quarter of last year.

HDFC's income from main business of home loans to individuals and builders jumped by 13 percent. This was the main driver of the company's profitability and income.

HDFC share price Monday rose 0.23 percent to Rs.820.45 at the Bombay Stock Exchange.

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Industrial output growth slumps to 0.6 percent

New Delhi, Oct 11 (IANS) India's industrial output growth slumped to 0.6 percent in August from 2.75 percent recorded in the previous month, due to contraction in manufacturing and mining sectors, government data showed Friday.

According to data released by the Central Statistics Office (CSO), manufacturing output, that constitutes nearly 76 percent of the industrial production, contracted by 0.1 percent in August year-on-year and mining production declined by 0.2 percent.

However, electricity output jumped by 7.2 percent.

The cumulative growth of the factory output, measured in terms of Index of Industrial Production (IIP) for the period April-August stood at 0.1 percent.

For the first five months of the current financial year, manufacturing output dropped by 0.1 percent, while mining production slumped by 3.4 percent.

Electricity sector has posted 4.5 percent growth in April-August period.

As per use-based classification, basic goods sector recorded 1.5 percent growth in August year-on-year and intermediate goods output increased by 3.6 percent. However, capital goods production dropped by 2 percent.

Consumer goods output dropped by 0.8 percent.

Output of consumer durables products slumped by 7.6 percent, while consumer non-durables recorded growth of 5 percent. The overall consumer goods sector posted a decline of 0.8 in output.

Economist at Angel Broking Bhupali Gursale said the industrial output data was a "huge disappointment" since markets were largely factoring in better numbers owing to the core output data and export growth.

"Healthy electricity production has supported the index excluding which the performance on a year-on-year basis would be flat," Gursale said.

D.S. Rawat, secretary general of Assocham, said: "The negative growth in critical industrial segments, especially in the festive season calls for a serious thinking by policy makers."

"The cheaper loans being announced for financing consumer goods may help revive consumer durables demand in the festive season to some extent. However, other sectors too need such boosts," Rawat said.

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