Warren Buffett’s company reported a 27 percent drop in its first-quarter profit largely because of a big gain it booked last year in connection with two acquisitions.
Berkshire Hathaway Inc on Friday said it earned US$4.06 billion, or US$1.65 per Class B share. That is down from US$5.59 billion, or US$2.27 per Class B share, a year ago when it completed its acquisitions of Duracell and Precision Castparts Corp.
Following those deals last year, Berkshire recorded a US$1.85 billion gain on its investments and derivatives. This year, its gain on investments and derivatives was US$504 million.
Photo: Bloomberg
Berkshire’s operating earnings excluding those investment gains were US$3.56 billion, or US$1.44 per Class B share. That is down from US$3.74 billion, or US$1.52 per Class A share. Analysts surveyed by FactSet expected US$1.78 in the latest quarter.
Buffett has said operating earnings offer a better view of quarterly performance, because they exclude investments and derivatives, which can vary widely.
Berkshire said its revenue jumped to US$65.2 billion from last year’s US$52.2 billion.
Berkshire Hathaway executives do not routinely discuss quarterly earnings results, but Buffett, 86, and Berkshire vice chairman Charlie Munger, 93, were likely to talk about the company’s performance during the annual meeting in Omaha, Nebraska, yesterday. Buffett was to spend several hours answering questions from shareholders, journalists and analysts at the meeting.
Berkshire has more than 90 operating units in insurance, chemical, energy, food and clothing, railroad and other sectors, and also has large investments in stocks of companies such as Apple Inc, Coca-Cola Co and Wells Fargo & Co.
Its insurance operations, which include Geico and General Reinsurance, recorded a US$267 million underwriting loss as it adjusted its estimated losses for several large policies upward somewhat.
BNSF Railway contributed US$838 million to the quarter’s profit as it hauled 6 percent more freight, up from US$784 million a year ago.
Berkshire’s utilities made US$501 million net income during the quarter, up from US$441 million.
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