Berkshire profit surge

Written By Unknown on Sabtu, 03 November 2012 | 10.46

Warren Buffett's Berkshire Hathaway said profit climbed 72 percent in the third quarter as a stock-market rally helped improve results in the derivatives book and earnings at the railroad climbed.

Separately, the company said it will buy Oriental Trading Co., a toy and party supplies company partially owned by private-equity firm KKR, for an undisclosed sum.

Net income rose to $3.9 billion, or $2,373 a share, from $2.28 billion, or $1,380, a year earlier, the Omaha, Neb.-based company said yesterday. Operating earnings, which exclude some investment results, were $2,057 a share, missing the $2,063 average estimate.

Oriental Trading, whose merchandise ranges from pink flamingos and wedding favors to Halloween decorations and beading supplies, was bought after being passed around by private equity firms during the past few years.

Berkshire has been making smaller acquisitions this year as Buffett searches for larger takeovers. Berkshire will pay around $500 million for the company after an earlier auction did not yield satisfactory bids, according to two people close to the deal.

Oriental Trading approached Berkshire and offered itself for sale at a price Buffett accepted, according to one of the people.

Oriental Trading's strong cash flow and high core profit margins, compared with its peers, made the business attractive to Buffett, the people added.

The Oracle of Omaha was also drawn to the stability of Oriental Trading's management, many of whom have been at the company for several years.


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