Berkshire Hathaway records 15 percent drop in profit
WARREN Buffett’s Berkshire Hathaway on Friday reported a 15 percent drop in second-quarter profit, as lower investment gains and a loss from insurance underwriting offset improvement in its BNSF railroad business.
Operating profit also fell short of analyst forecasts, although Berkshire attributed much of the decline to currency fluctuations and its accounting for a major contract with the insurer American International Group.
Net income for Omaha, Nebraska-based Berkshire fell to $4.26 billion (R57.16bn), or $2 592 per Class A share, from $5bn, or $3 042 per share, a year earlier.
Operating profit declined 11 percent to $4.12bn, or $2 505 per Class A share, from $4.61bn, or $2 803 per share. Analysts on average expected operating profit of about $2 791 per share.
Buffett believes operating income is a better gauge of how Berkshire and its more than 90 businesses are doing than net income, which fluctuates more because it incorporates investment and derivative gains, which fell 64 percent from a year earlier.
Book value per share, Buffett’s preferred measure of growth, rose 2.7 percent from the end of March to $182 816.
The company’s stock price, meanwhile, set a record high on Friday, with Class A shares closing up $1 629.80 at $270 000.