Warren Buffett’s Berkshire Hathaway Inc posted second-quarter profits that beat analysts’ estimates on gains at insurance units, manufacturing operations, energy companies and railroad operator Burlington Northern Santa Fe.
Operating earnings, which exclude some investment results, were US$2,252 a share, the Omaha, Nebraska-based company said on Firday in a statement. That compares with the US$1,777 average estimate of three analysts surveyed by Bloomberg.
Buffett, 81, built Berkshire over four decades from a failing textile maker into a company that produces energy, hauls freight and sells products ranging from ice cream to underwear.
“It’s a great balance sheet at the end of the day,” Tom Lewandowski, an analyst at Edward Jones & Co who recommends that clients buy the stock, said in an interview before results were announced. “There’s only a few balance sheets out there that can stack up against it.”
Book value, a measure of assets minus liabilities, rose in the quarter to US$177.4 billion from US$176 billion at the end of March. The cash hoard climbed to US$40.7 billion from US$37.8 billion three months earlier.
Berkshire’s Class A shares rose 1.7 percent to US$128,479 on Friday. They have advanced 12 percent this year, compared with the 11 percent gain for the Standard & Poor’s 500 Index. Results were released after the close of regular trading.
The insurance division posted an underwriting profit of US$619 million, compared with a loss of US$7 million a year earlier, led by gains at the reinsurance business run by Ajit Jain. Underwriting profit at the Geico auto insurance unit fell 2.5 percent to US$155 million as the severity and frequency of claims increased.
Buffett has used insurance premiums Berkshire holds before paying claims to amass the largest equity stakes in companies including Coca-Cola Co and Wells Fargo & Co. Berkshire’s stock portfolio fell 3.3 percent to US$86.2 billion on June 30 from three months earlier.
Buffett’s biggest takeover, railroad Burlington Northern Santa Fe, was completed in 2010 in a US$26.5 billion transaction. The business contributed US$802 million to earnings, compared with US$690 million a year earlier.
Utility unit MidAmerican Energy Holdings Co added US$253 million to Berkshire’s profit compared with US$215 million in last year’s second quarter.
Earnings from manufacturing, service and retailing units increased to US$1.03 billion in the second quarter from US$789 million in the same period last year. The group of businesses includes engine-additive maker Lubrizol; Marmon Holdings, a manufacturer of construction materials; and Fruit of the Loom, which produces underwear and other clothing.
Buffett has been positioning his firm for a rebound in housing by adding to holdings of Wells Fargo, the largest US home lender, purchasing residential real-estate brokers and bidding on the mortgage assets of bankrupt Residential Capital LLC. He said last month that housing is starting to rebound, while the rest of the US economy is slowing.
“For the last two years, I’ve seen everything except housing moving forward in the economy,” Buffett said. “In the last few months, the rest of the economy actually has flattened out. Housing is picking up.”
Net income slid 9 percent in the quarter to US$3.11 billion as losses on Buffett’s derivatives bets on equity markets widened to US$1.17 billion in the three months ended June 30 from US$271 million a year earlier.