Insurance, economy weigh on Berkshire Hathaway profit

OMAHA: Berkshire Hathaway Inc yesterday said its quarterly operating profit fell more than analysts expected, as weaker results from insurance underwriting and a slowing economy weighed on the conglomerate run by billionaire Warren Buffett. The auto insurer Geico suffered larger accident gains, while cargo volumes for consumer and agricultural products declined at the BNSF railroad. Earnings barely budged in Berkshire’s manufacturing and its service and retailing lines of business. Second-quarter operating profit declined 11 percent to $6.14 billion, or roughly $3,757 per Class A share, from $6.89 billion, or roughly $4,190 per Class A share, a year earlier.

Analysts on average expected operating profit of $3,851.28 per share, according to Refinitiv IBES.

Berkshire also said quarterly net income rose 17 percent to $14.07 billion, or $8,608 per Class A share, from $12.01 billion, or $7,301 per Class A share, a year earlier, reflecting higher unrealized gains on Berkshire’s investments.

A US accounting rule requires Berkshire to report such gains with earnings. That rule adds volatility to Berkshire’s net results, and Buffett says it can mislead investors. The US economy’s annualized growth rate slowed to 2.1 percent in the second quarter from 3.1 percent in the first quarter, as an acceleration in consumer spending was partially offset by declining exports, manufacturing and business investment, reflecting the US-China trade war.