First Glimpse Inside Iscar Reveals $440 Million Profit in 2005

The privately-owned metalworking company that Buffett is buying generated $1.4 billion turnover in 2005

OMAHA, Nebraska - Iscar netted $440 million on sales of $1.4 billion in 2005, market sources claim.

The Iscar Group, which jealously guards its financial status and never leaks to the press, refused to comment on the figures.

Iscar's results are expected to remain confidential in the future, because Berkshire Hathaway also is quite secretive. It reports the barest of data about its portfolio companies.

Time after time Warren Buffett refused to answer TheMarker's questions regarding Iscar's profitability, referring the reporter to Eitan Wertheimer. Wertheimer, as usual, stayed mum.

The last time estimates of Iscar's profits were published was in 2002, when TheMarker magazine revealed net profits of $200-250 million. The source for that report was an investment banker who had met with Iscar to discuss the possibility of an IPO.

On the basis of these estimates, TheMarker placed the Wertheimers second in that year's list of Israel's 500 richest.

Iscar decided not to go public, and three years agreed to sell control of the company to Berkshire Hathaway.

If the source is accurate, then the company's level of profitability - one-third of revenues - is rare in the business world, particularly in industry.

However, market sources estimated that Iscar is capable of reaching even better margins due to its special business model, ability to charge a high premium on its products, and low taxes liability.

Iscar manufactures metal-cutting tools and carbide blades for those tools

The company is located in the Galilee and employs thousands. It exports most of its products and is considered a world leader in its field.

Stef Wertheimer established Iscar in Nahariya in 1952, later moving it to the Tefen industrial zone.

The company has additional plants in Europe and the Far East. This year, Iscar began building two factories in China, as well as plants in Korea, India and Japan.