Berkshire operating profit falls short

NEW YORK: Warren Buffett’s Berkshire Hathaway Inc confirmed that its first-quarter profit rose 8 per cent, while operating results fell short of analyst forecasts as falling oil prices and coal demand hurt its BNSF railroad unit.

The Omaha, Nebraska-based conglomerate, which has close to 90 operating units, also said its book value per share, measuring assets minus liabilities and Buffett’s preferred gauge of growth, rose 1.2 per cent from year end.

Net income rose to $5.59 billion, or $3,401 per Class A share, from $5.16 billion, or $3,143 per share, a year earlier.

Operating profit fell 12 per cent to $3.74 billion, or $2,274 per Class A share, from $4.24 billion, or $2,583 per share.

Analysts on average had expected operating profit of about $2,759 per share, according to Thomson Reuters I/B/E/S, before Berkshire released preliminary results at its annual meeting in Omaha on April 30.

Results suffered as falling oil prices and lower demand for coal contributed to a 25 per cent drop in profit at BNSF to $784 million, as overall volume fell 5.5 per cent.

Freight revenue from industrial products such as petroleum fell 18 per cent, and from coal tumbled 39 per cent.

Railroad car loadings industry wide fell “significantly” in the first quarter, and “almost certainly will continue to be down the balance of the year,” Buffett said at the meeting.

Buffett also said insurance results suffered from payouts related to Texas hailstorms. Insurance underwriting profit fell 56 per cent to $213 million despite improvement at the Geico auto insurer, which raised premiums to offset rising accident claims.

Book value per share rose to $157,369 per Class A share as of March 31 from $155,501 three months earlier, while revenue rose 8 per cent from a year earlier to $52.4 billion.