Buf­fett firm’s Q3 profit drops 24% on in­vest­ments value

Kuwait Times - - BUSINESS -

Berk­shire Hath­away Inc re­ported a 24 per­cent drop in third-quar­ter profit on Fri­day be­cause last year’s re­sults were helped by a huge pa­per gain on the value of its Kraft Heinz Food Co. stake.

The con­glom­er­ate bil­lion­aire War­ren Buf­fett leads posted solid re­sults at most of the more than 90 com­pa­nies it owns, post­ing net in­come of $7.2 bil­lion, or $4,379 per Class A share, in the quar­ter. That’s down from $9.43 bil­lion, or $5,737 per A share, a year ago when it recorded a $4.4 bil­lion af­ter-tax gain from the merger of Kraft and Heinz. Buf­fett says op­er­at­ing earn­ings of­fer a bet­ter view of quar­terly per­for­mance be­cause they ex­clude in­vest­ments and de­riv­a­tives, which can vary widely. An­a­lysts gen­er­ally base their es­ti­mates on Berk­shire’s op­er­at­ing earn­ings, which came in at $2,951 per Class A share.

The four an­a­lysts sur­veyed by Fac­tSet ex­pected Berk­shire to re­port op­er­at­ing earn­ings per Class A share of $3,021.83. Rev­enue at the Omaha, Ne­braska-based com­pany grew slightly to $59.07 bil­lion in the quar­ter, up from $58.99 bil­lion last year.

Berk­shire of­fi­cials do not typ­i­cally com­ment on the com­pany’s quar­terly earn­ings re­ports, and no one from the com­pany re­sponded to a mes­sage from The As­so­ci­ated Press on Fri­day.

Berk­shire’s BNSF rail­road weighed down the com­pany’s prof­its be­cause it hauled less freight, es­pe­cially coal and crude oil, Ed­ward Jones an­a­lyst Jim Shana­han said. The rail­road gen­er­ated $1.02 bil­lion net in­come, down from $1.16 bil­lion a year ago.

But Berk­shire’s profit was helped by the Pre­ci­sion Cast­parts and Du­ra­cell ac­qui­si­tions it made early this year, and its moun­tain of cash grew to nearly $85 bil­lion at the end of Septem­ber, up from roughly $73 bil­lion in June.

The record amount of cash Berk­shire is hold­ing will only add to spec­u­la­tion about what Buf­fett’s next ac­qui­si­tion might be. CFRA Re­search an­a­lyst Cathy Seifert noted ac­qui­si­tions play a key role in Berk­shire’s growth since many of its sub­sidiaries tend to grow at about the same rate as the over­all econ­omy. “I thought it was a so-so quar­ter,” Seifert said. “They’re go­ing to have to con­tinue to do ac­qui­si­tions to pro­duce growth.”

Berk­shire al­ready owns more than 90 sub­sidiaries, in­clud­ing cloth­ing, fur­ni­ture and jew­elry firms. It also has ma­jor in­vest­ments in such com­pa­nies as Coca-Cola Co and Wells Fargo & Co. Berk­shire said it held $22 bil­lion of Wells Fargo stock at the end of the quar­ter, so there wasn’t any sign that Buf­fett sold off any of Berk­shire’s 10 per­cent stake in the bank af­ter the scan­dal re­lated to Wells Fargo’s sales prac­tices. Berk­shire shares have climbed 8.5 per­cent since the be­gin­ning of the year. They closed Fri­day at $214,545, up 4 per­cent in the last 12 months. — AP Kuwait’s sin­gle big­gest yearly cash prize of KD 1 mil­lion Kuwait’s big­gest quar­terly cash prizes, up to KD500,000 Two win­ners of KD1,000 ev­ery work­ing day The most chances to win Only bank that trans­fers your chances to win from year to year

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OMAHA: Berk­shire Hath­away Chair­man and CEO War­ren Buf­fett tours the ex­hibit floor be­fore pre­sid­ing over the an­nual share­hold­ers meet­ing in Omaha, Neb. Berk­shire Hath­away re­ported fi­nan­cial re­sults on Fri­day. —AP

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