Warren Buffett’s Berkshire Hathaway Inc on Friday said its second-quarter profit fell by 37 percent, reflecting a significant decline in investment gains and an underwriting loss from insurance operations, which include Geico Inc.
Net income for the Omaha, Nebraska-based insurance and investment company fell to US$4.01 billion, or US$2,442 per Class A share, from US$6.4 billion, or US$3,889 per share, a year earlier.
Operating profit dropped well below analysts’ forecasts, declining 10 percent to US$3.89 billion, or US$2,367 per share, from US$4.33 billion, or US$2,634 per share, despite improvements at the Burlington Northern Santa Fe railroad and Berkshire Hathaway Energy units.
Analysts on average expected operating profit of about US$3,038 per share, according to Thomson Reuters I/B/E/S.
Revenue rose by 3 percent to US$51.37 billion. Book value per share, Buffett’s preferred measure of growth, rose 2 percent from the end of March to US$149,735.
Net investment and derivative gains plummeted 94 percent to US$123 million from US$2.06 billion a year earlier, when Berkshire shed its 40-year stake in former Washington Post publisher Graham Holdings Co.
The most recent quarter included losses on contracts betting on long-term gains in major stock market indexes.
Earnings from insurance, Berkshire’s best-known operating sector, fell 39 percent to US$939 million, and included a US$38 million underwriting loss versus a US$411 million profit a year earlier.
Meanwhile, a Berkshire business that insures against major catastrophes suffered a US$411 million pre-tax underwriting loss, reflecting currency fluctuations and a storm loss in Australia.
Berkshire has more than 80 businesses operating in sectors including insurance, energy, food, industrial products and railroads.
As of June 30 it also owned US$117.7 billion of stocks including Wells Fargo & Co and Coca-Cola Co. It bought US$3.09 billion of equities in the quarter, without identifying the companies.
On Friday, Berkshire Class A shares closed down US$187.24 at US$215,462.76, and its Class B shares rose US$0.20 to US$143.55. The shares are about 6 percent below their record highs set on Dec. 8 last year.
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