Berkshire Hathaway profit falls as insurance underwriting declines - Yahoo Finance

Buffett, chairman and CEO of Berkshire Hathaway, takes his seat to speak at the Fortune's Most Powerful Women's Summit in Washington

By Jonathan Stempel

(Reuters) - Berkshire Hathaway Inc <BRKa.N> on Saturday said its quarterly operating profit fell more than analysts expected, as weaker results from insurance underwriting and a slowing economy weighed on the conglomerate run by billionaire Warren Buffett.

The auto insurer Geico suffered larger accident gains, while cargo volumes for consumer and agricultural products declined at the BNSF railroad. Earnings barely budged in Berkshire's manufacturing and its service and retailing lines of business.

Second-quarter operating profit declined 11% to $6.14 billion, or roughly $3,757 per Class A share, from $6.89 billion, or roughly $4,190 per Class A share, a year earlier.

Analysts on average expected operating profit of $3,851.28 per share, according to Refinitiv IBES.

Berkshire also said quarterly net income rose 17% to $14.07 billion, or $8,608 per Class A share, from $12.01 billion, or $7,301 per Class A share, a year earlier, reflecting higher unrealized gains on Berkshire's investments.

A U.S. accounting rule requires Berkshire to report such gains with earnings. That rule adds volatility to Berkshire's net results, and Buffett says it can mislead investors.

The U.S. economy's annualized growth rate slowed to 2.1% in the second quarter from 3.1% in the first quarter, as an acceleration in consumer spending was partially offset by declining exports, manufacturing and business investment, reflecting the U.S.-China trade war.

Berkshire ended June with $122.4 billion of cash and equivalents, though it spent $2.1 billion in the quarter to repurchase its own stock.

The cash hoard reflects Buffett's 3-1/2-year drought in finding major acquisitions. He committed $10 billion in April to help Occidental Petroleum Corp <OXY.N> buy rival Anardako Petroleum Corp <APC.N>.

Berkshire operates more than 90 businesses that also include Dairy Queen ice cream, Fruit of the Loom underwear, and its namesake energy company and real estate brokerage.

(Reporting by Jonathan Stempel in New York; Editing by Hugh Lawson)

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2019-08-03 12:21:00Z
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Heathrow flights cancelled as support staff strike looms - BBC News

Heathrow Airport is to cancel 177 flights on Monday and Tuesday after a union vote rejected a pay offer.

Around 4,000 Unite members including engineers, firefighters and security staff voted on the airport's revised deal, with 88% opting to strike.

If the walk-outs go ahead, Unite says, almost 2,500 staff will miss work.

Heathrow is yet to announce which flights will be cancelled, and said passengers should check with their airlines to see if they were affected.

Affected passengers might be offered other flights or refunds by their airline, it added.

Heathrow said the flight cancellations, which affect 91 airlines including British Airways, were a pre-emptive measure in case a solution was not found.

Talks between union leaders and Heathrow management at the conciliation service Acas, aimed at averting the strike action, lasted until late on Friday and resumed on Saturday.

The airport, which advised passengers to check its website for updates, said its contingency plans would keep Heathrow open and safe on both strike days, albeit with some disruption.

Passengers still scheduled to fly on Monday and Tuesday have been warned to arrive at least three hours ahead of long-haul departures and two hours ahead of short-haul departures, because it may take longer to get through security.

'Growing anger'

A Heathrow spokeswoman said: "I can confirm that we are working with our airline partners to consolidate and reduce the number of flights operating during the strike period.

"We have proactively cancelled 177 flights departing Heathrow across Monday and Tuesday.

"Passengers on these flights will have either been rebooked onto alternative services or provided a refund."

Unite regional co-ordinating officer Wayne King said: "This latest vote for strike action points to growing anger among the airport's workers in a whole range of vital jobs which are essential to the smooth and safe running of Heathrow.

"Airport bosses need to heed this latest strike vote and the overwhelming rejection by our members of the revised pay offer which offers little over and above the original offer of £3.75 extra a day for many workers."

Meanwhile, talks aimed at averting a separate strike by British Airways pilots are to continue next week.

Leaders of the British Airline Pilots Association (Balpa) met the company last week to try to resolve the dispute over pay.

The union would have to give two weeks' notice of any industrial action.

Can I claim compensation if my flight has been cancelled?

If your flight out of Heathrow has been cancelled, you should contact your airline to see what you are entitled to in terms of a refund or compensation.

However, if your flight has been cancelled due to airport (rather than airline) staff striking, it is unlikely you will be able to claim compensation as this would be considered "extraordinary circumstances" outside of the airline's control, the Civil Aviation Authority said.

The CAA added that the airport is not obliged to pay compensation directly to passengers, and whether the airport gives its customers (the airlines) compensation is a commercial issue between the two parties.

If your flight has been cancelled because airline staff are striking, the CAA said, then this would be considered within the airline's control, and therefore you have a legal right to either:

• A full refund, and this includes flights in the same journey that might be from a different airline (for example, an onward or return flight)
• A replacement flight to get to your destination
• Or, if you are part way through your journey and don't want a replacement flight, you are entitled to a flight back to the airport you originally departed from

If the cancellation delays you by two hours or more, you are also legally entitled to compensation and help with any costs you may incur as a result of the delay.

---

Are you due to fly on Monday or Tuesday? Has your flight been affected? Get in touch by emailing haveyoursay@bbc.co.uk

Please include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways:

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https://www.bbc.com/news/business-49212984

2019-08-03 07:38:50Z
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5 ways the US Fed's rate cut affects Canadians - BNNBloomberg.ca

The U.S. Federal Reserve lowered its benchmark interest rate by a quarter point Wednesday, the first cut since the financial crisis.

While Fed Chair Jerome Powell didn’t commit to further decreases, U.S. President Trump wasted no time hurling attacks at the central bank about the “disappointing” size of the cut.

It might not seem apparent at first, but the U.S. Federal Reserve’s decision has a significant impact on Canada and everyday Canadians. Here’s a look at how lower rates south of the border could ripple through our country, according to five experts.

Bank of Canada

“The Bank of Canada hadn’t shifted its rhetoric as drastically as the Fed did leading up to the Fed cut. Growth and inflation in Canada are both right where the BoC wants them to be, in contrast to the Fed statement that highlighted low inflation and a slowdown in some cyclical sectors in the U.S. including business investment. Overall, the fact that the U.S.  economy is still relatively healthy is a positive for Canada given our dependence on the U.S. for trade. But, with the Fed now lowering rates and the BoC on hold, the Canadian dollar is poised to receive a lift, something that will eventually cause the BoC to become more dovish as the year progresses.”

- Katherine Judge, economist, CIBC Capital Markets

Mortgage rates

“Canadians can expect fixed rates to maintain their current levels, or possibly decrease, in the foreseeable future. Those with variable rates will only be affected if and when the Bank of Canada makes the decision to cut the key overnight rate.

“Low and declining mortgage rates in Canada also reinforce the current stable national housing market. Those shopping for a new home will appreciate the certainty of knowing that they can secure a mortgage at a relatively low rate compared to years prior. If mortgage rates do decline further in Canada, it’s possible that the Bank of Canada’s qualifying rate will decrease from its current rate of 5.19 per cent.  This will make it even easier for first-time home buyers to qualify for their first home."

- James Laird, co-founder, Ratehub Inc.

The loonie

“Taken at face value, a drop in U.S.  interest rates should lower the dollar’s appeal. But with the Fed signalling concern about the global economy (and Donald Trump escalating his trade war against China), investors are downgrading the outlook for countries like Canada.

“Canadian interest rates have come down in sympathy with their U.S.  counterparts, and this has dragged the loonie back below levels that prevailed a year ago.

“We expect more of this. If the Federal Reserve engineers a late-nineties style soft landing and bounces back, rate expectations should recover – and the dollar should maintain position relatively to the Canadian dollar. Alternatively, if the Fed fails to counteract the effects of the trade war on the wider economy, this will negatively impact Canada – and put pressure on [Bank of Canada Governor] Stephen Poloz to cut benchmark rates. In both cases, the Canadian dollar is vulnerable.”

- Karl Schamotta, chief market strategist, Cambridge Global Payments

Canadian equities

“The last few months have seen a pickup in economic activity, but if Canada's largest trading partner stumbles economically, there will not be much to keep us all from being impacted. The real estate sector, which has been a huge support to the domestic economy in Canada, is going to be vulnerable and so will the financial institutions (banks and mortgage companies) that have significant exposure to it.

“Exports of goods and materials, a big part of Canada's economy, continue to be exposed to the global trade uncertainties. Non-cyclical sectors like technology and health care will provide some safety as will the traditional ‘defensive’ sectors like consumer staples and utilities. But remember, when traders and investors decide to sell, all risk assets (especially equities) will have a correlation of one, which means that they are all going down in unison until value hunters start to look for bargains.”

- Scott Tomenson, managing partner and chief investment strategist, High Rock Capital Management

Commodities

“The uncertainty surrounding the next move by the Fed will likely create additional volatility in equity markets and the gold market, especially around each major U.S. data release and Fed statements, until a more solid direction is projected by the Fed. Gold is likely to benefit in this scenario in several ways – lower interest rates, increased liquidity, and increased volatility. Gold will also benefit from the increased volatility and uncertainty created by the U.S. administration.

“Easier U.S. monetary policy, all else equal, should help push the U.S. dollar lower. This in turn should support commodity prices. Our view is that the U.S. dollar is overvalued and will continue its long-term downtrend, which is one of our bullish factors for gold.”

- Chantelle Schieven, research head, Murenbeeld & Co.

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August 03, 2019 at 12:20AM

Enbridge CEO Al Monaco ‘deeply saddened’ by death in Kentucky gas pipeline explosion - Global News

A natural gas pipeline shut down after a massive explosion killed a woman in Kentucky on Thursday will not go back into service until it is “absolutely safe to do so,” the CEO of Enbridge Inc. vowed Friday.In a news release, Al Monaco said he is “deeply saddened” by the death in the incident involving the company’s Texas Eastern natural gas pipeline.“Our hearts go out to the family and the community,” said Monaco on a conference call to discuss second-quarter results on Friday.“Our first concern, of course, is for those impacted, so we mobilized resources to assist and support them. Secondly, we’re working with the federal agencies to investigate what happened and how the learnings can improve our approach and that of the industry in the future.”The pipeline was shut down after the fiery incident that sent five people to hospital and damaged structures within 450 metres, including destroying at least five homes and railroad tracks and forcing the evacuation of a nearby mobile home park, authorities said.A regional gas pipeline ruptured early Thursday in Kentucky, causing a massive explosion that killed one person, hospitalized five others, destroyed railroad tracks and forced the evacuation of a nearby mobile home park, authorities said.(Naomi Hayes via AP)
Story continues belowREAD MORE: 1 dead, up to 7 missing after Enbridge pipeline blast in KentuckyKentucky State Police said a handful of people who were missing after the blast have now been accounted for.While the explosion in Kentucky was unfortunate, analyst Jennifer Rowland of Edward Jones says she doesn’t think it will make it more difficult for Enbridge to win approvals for its other projects.“I think if the event happened in Michigan or Minnesota, it would add fuel to the fire … But as long as Enbridge handles the incident prudently and appropriately, which I expect them to, I don’t think it will have a meaningful impact,” she said in an email.She added the investigation could find the cause of the explosion was outside of the company’s control.Enbridge is under pressure on multiple fronts in the United States.READ MORE: Calgary-based Enbridge sees second-quarter earnings riseThe state of Michigan is trying to shut down part of its Line 5 pipeline that runs under the Straits of Mackinac in the Great Lakes region and an indigenous group in Wisconsin is suing to remove another piece of Line 5 that runs across its reservation.Meanwhile, its Line 3 replacement project, which would double capacity on a different pipeline carrying oil from Alberta to the Midwest, has been delayed after a Minnesota court ruled that Enbridge’s final environmental impact statement was inadequate.Line 5, which ships 540,000 barrels per day of light crude oil and propane to customers in Michigan and Ontario, and Line 3 are both part of Enbridge’s Canadian Mainline pipeline system, which handles most of Western Canada’s crude oil exports.Enbridge announced Friday the much-anticipated beginning of an open season for the Mainline with bids to be accepted until Oct. 2.READ MORE: Canadian energy giants take out full-page newspaper ads as federal election loomsThe company wants to change from a common carrier model, where all of the system’s capacity is available on a month-to-month basis, to one where shippers can lock into contracts of up to 20 years, starting on July 1, 2021.Results of the bidding and contracting of the Mainline will point the way toward future growth possibilities for the system and for its downstream connections, said Monaco on the call.Mainline capacity would be 3.225 million barrels per day, assuming Line 3 is completed, of which up to 2.9 million bpd would be contracted and 10 per cent, or 325,000 bpd, remain in spot service, Enbridge said.The change is subject to regulatory approval.WATCH: Three energy giants took out full-page ads in papers across Canada asking voters to tell politicians they support the oil and gas sector ahead of the federal election. Reaction to full-page ad from energy giants

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August 03, 2019 at 01:37AM

Oreo Iced Capps just weren't our thing. Plus, sluggish lunch sales hamper Tim Hortons growth - Financial Post

Despite a relentless stream of menu changes, Tim Hortons struggled with lunchtime sales in its second quarter, the coffee chain’s parent, Restaurant Brands International Inc., said on Friday.

Tim Hortons packed a series of product launches into the quarter, including omelette bites, a value chicken sandwich, a line of Beyond Meat breakfast sandwiches and a Beyond Meat burger.

But RBI president Jose Cil told analysts Friday that the strength of the menu additions were offset by “softness” in lunch, “particularly during the second half of the quarter where we saw a gap in sales of our sandwiches and wraps versus last year.”

Tim Hortons was expecting the new chicken sandwich to help drive growth, but it fell short. Cold beverage sales also lagged last year, which was the strongest year for cold drinks at Tims in “recent memory,” Cil said. He blamed the dip, in part, on an Oreo Iced Capp promotion, which underperformed expectations.

“This was an OK quarter,” Tim Hortons president Alex Macedo told the Financial Post. “A lot of the things we did worked well, but some others — like the cold beverages and lunch — didn’t.”

“It happens from time to time. We’re going to have quarters that are better, and quarters that are not that good.”

Tim Hortons’ issues with lunch and cold drinks came amid an otherwise solid quarter for Restaurant Brands International, which also owns Burger King and Popeyes. RBI posted system-wide sales growth of 7.9 per cent, up from 7.3 per cent the previous year. Meanwhile Tim Hortons saw system-wide sales growth dip slightly, to 1.6 per cent, from 2.2 per cent a year ago. Tim Hortons same-store sales — a key gauge for success in retail — grew by 0.7 per cent in Canada, and by 0.5 per cent globally.

Macedo said the performance didn’t warrant any “material changes.” Instead, the plan is to continue “on-trend innovation” — an onslaught of experiments that has already pushed the 55-year-old coffee-and-doughnuts chain to enter the realms of plant-based hamburgers and nitrogen-infused beverages in recent months.

“Our guests wanted Tim Hortons to react faster to changing habits,” he said. So Tims is now bent on being the first, “or the very quick second” to bring to market “everything that’s on trend,” Macedo said.

This was an OK quarter. A lot of the things we did worked well, but some others — like the cold beverages and lunch — didn’t.

Tim Hortons president Alex Macedo

Last month, Tim Hortons saw long lineups for the opening of its Innovation Cafe, on the ground floor of the downtown Toronto office tower where the chain is headquartered. The expansive restaurant is unrecognizable from a regular Tim Hortons, more like the financial district coffee bars that cater to Toronto’s Bay Street set, with an espresso machine, a series of nitrogen-infused cold beverages on tap and a roster of more adventurous doughnuts, such as crème brûlée and hazelnut buttercream.

“The doughnuts — we can’t keep them on the trays,” Macedo said. “Just now, I was in the café, a lady came in and bought 60. Behind her, someone else bought 10. And then we ran out. The doughnuts have been, by far, the biggest thing.”

The café drew praise from Scotiabank analyst Patricia Baker on Friday, who wrote that it “will reassure investors that a lot of innovative thinking is going on at Tim’s.”

Macedo said the cafe — meant to be an incubator for ideas — has already produced items that will likely be included when Tim Hortons starts opening its new “super urban” restaurant format this year.

The new urban model, meant to fit better in major cities where rent is high, will be smaller, with “reduced seating, a really cool menu and a really cool vibe,” Macedo said. The chain has already secured locations and franchisees, and expects to have “a few” urban restaurants open in Toronto by the end of the year.

“We’re actually close to start construction on our first couple sites,” he said. “We’re going to build several restaurants in Toronto to learn. And then later we can go to Vancouver. We can probably build a few in Edmonton and Calgary. Ottawa for sure. Maybe Halifax, one or two. And then in Montreal, I think we can build several.”

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August 03, 2019 at 04:12AM

Crude curtailment 'no way to run a railroad,' says Imperial Oil CEO - CBC News

The close: TSX continues to slide as global trade tensions escalate - The Globe and Mail

Canada’s main stock index fell for the fifth session on Friday following a sharp escalation in U.S.-China trade row that renewed worries over slowing global growth and sparked a flight to safer assets.

The Toronto Stock Exchange’s S&P/TSX composite index was down 105.38 points, or 0.64 per cent, at 16,271.66.

U.S. President Donald Trump said he would impose a 10-per-cent tariff on $300 billion of Chinese imports from Sept. 1, escalating a bruising and protracted clash between the world’s two biggest economies. China said on Friday it would take countermeasures.

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Seven of the TSX’s 11 major sectors were in the red.

The energy sector dropped 2 per cent while the materials sector, which includes precious and base metals miners and fertilizer companies, lost 1 per cent.

Leading the index were Aphria Inc., up 40.1 per cent, Cronos Group Inc., up 8.5 per cent, and Aurora Cannabis Inc., higher by 7.8 per cent.

Lagging shares were Open Text Corp., , down 8.8 per cent, SNC-Lavalin Group Inc., down 5.9 per cent, and Methanex Corp,, lower by 5.1 per cent.

Wall Street extended its sell-off on Friday amid renewed trade fears, capping a week where the benchmark S&P 500 index and the Nasdaq saw their worst weekly percentage plunges since December, when investors were spooked by the prospect of a looming recession.

The Dow Jones Industrial Average fell 98.41 points, or 0.37 per cent, to 26,485.01, the S&P 500 lost 21.52 points, or 0.73 per cent, to 2,932.04 and the Nasdaq Composite dropped 107.05 points, or 1.32 per cent, to 8,004.07.

Oil prices bounced back from losses that exceeded 7 per cent the previous session and the yen scaled further against the dollar a day after its strongest daily gain in over two years.

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The moves followed a sharp Wall Street selloff triggered by U.S. President Donald Trump’s threat Thursday to impose a 10 per cent tariff on $300 billion worth of Chinese imports.

China did not specify how it would retaliate, but analysts have said options include tariffs, a ban on export of rare earths used in everything from military equipment to consumer electronics, and penalties against U.S. companies in China.

The trade war between the world’s largest economies has already dislocated global supply chains and slowed economic growth. The abrupt escalation capped a critical week for global markets after the U.S. Federal Reserve delivered a widely anticipated interest rate cut but played down expectations of many more ahead.

“The tariff threat was a splash of cold water. The market had become accustomed to the current state of U.S-China trade negotiations, but a hike in tariffs wakes you up to the fact that the trade war is still with us,” said Michael Antonelli, market strategist at Robert W. Baird in Milwaukee.

The pan-European STOXX 600 index lost 2.46 per cent and MSCI’s gauge of stocks across the globe shed 1.30 per cent.

Emerging market stocks lost 2.12 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.94 per cent lower, while futures in Japan’s Nikkei lost 1.09 per cent.

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U.S. data on Friday showed employment growth in July slowed as expected, which along with trade turmoil may encourage the Federal Reserve to cut interest rates again in September.

“On balance it is probably a slightly dollar-negative (employment) number because (it) increases the case for a Fed rate cut in September. We’re already at the point where we’re trading that,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

A further 25-basis-point cut by the Fed is priced in for the central bank’s September meeting while the chance of another cut in October is roughly 1-in-2 according to Fed futures markets.

Safe-haven assets were bid across markets with German 10-year government bond yields dropping to an all-time low of -0.502 per cent and the country’s entire government bond yield curve turning negative for the first time ever.

Benchmark 10-year notes last rose 10/32 in price to yield 1.8571 per cent, from 1.892 per cent late on Thursday. They fell to 1.832 per cent earlier, the lowest since November 2016.

“In the grand scheme of things, it will become clearer and clearer that the Federal Reserve has started an easing cycle and will have no choice but to cut rates further,” said Akira Takei, fund manager at Asset Management One.

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In currency markets the Japanese yen, which on Thursday gained the most in over two years against the dollar, further strengthened 0.74 per cent to 106.58 per dollar.

The Swiss franc reached a two-year high of 1.0907 against the euro, which bounced back from a two-year low of $1.1027 earlier in the week. The common currency was recently up 0.23 per cent to $1.1109.

The British pound held near a 30-month low versus the dollar as the governing Conservatives’ majority in parliament was reduced to one seat, three months before the country is due to leave the European Union.

Sterling was last trading at $1.2159, up 0.23 per cent on the day.

The heavyweight financials sector slipped 0.8 per cent and the industrials sector saw a similar fall.

Oil prices gained about 3 per cent on Friday a day after recording their biggest daily drop in several years on U.S. President Donald Trump’s vow to impose more tariffs on Chinese imports.

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For the week, crude oil benchmarks recorded a loss.

Washington’s new tariffs on China, due to take effect on Sept. 1, intensify the trade war between the world’s top two economies. Any resulting economic slowdown could hurt crude demand.

Brent crude futures for October delivery settled at $61.89 a barrel, up $1.39, or 2.30 per cent. The global benchmark slid more than 7 per cent on Thursday, the steepest daily drop in more than three years.

WTI crude futures for September delivery settled at $55.66 a barrel, rising $1.71, or 3.17 per cent, after Thursday’s nearly 8 per cent plunge, the biggest loss in more than four years.

For the week, Brent lost about 2.7 per cent, while WTI shed about 1.2 per cent.

Before Thursday’s decline, crude futures had seen a fragile rally supported by steady drawdowns in U.S. inventories but pressured by a shaky global demand outlook.

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“The market is still digesting the impact of the tariffs on oil markets, but given China has been taking very little U.S. crude year-to-date, we see little scope for the tariffs to directly impact market fundamentals,” RoboResearch Commodities Strategist Ryan Fitzmaurice said.

Reuters

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August 02, 2019 at 04:27PM