Berk­shire Hath­away records 15 per­cent drop in profit

The Star Early Edition - - OPINION & ANALYSIS -

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.

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