Berkshire's Profit Surges on Big Investment Gain
November 06 2015 - 5:20PM
Dow Jones News
Berkshire Hathaway Inc.'s profit more than doubled in the third
quarter, bolstered by a $4.4 billion gain it booked in connection
with the merger between H.J. Heinz Co. and Kraft Foods Group
Inc.
But its operating earnings, which exclude the impact from some
investment results, declined 3.7%, driven by a drop in income at
its core insurance-underwriting business.
The conglomerate, led by legendary investor Warren Buffett, has
turned in recent years to acquisitions, rather than stock investing
or the insurance business, as the way to drive earnings higher.
Berkshire now pulls in income from a railroad, utilities,
industrial manufacturers, home builders, branded-food sellers and
even an auto dealership.
Mr. Buffett partly orchestrated the July tie-up between Kraft
and Heinz, netting the big gains for his firm. Berkshire's net
investment gains for the quarter totaled $4.88 billion, versus a
loss of $107 million a year earlier.
His latest coup: Precision Castparts Corp., an Oregon parts
supplier that works largely with the booming aerospace industry.
Berkshire agreed to buy the company in August for $32 billion in
cash, its largest-ever takeover.
In the third quarter, the investment gains helped mask the
weakness in Berkshire's insurance-underwriting business, which
includes Geico Corp. The division reported a 34% decline in
operating profit to $414 million.
Insurance-investment income, meanwhile, rose 3.6% to $840
million. And operating profit at the non-insurance businesses, like
the railroad, utilities and energy segments, increased 5.2% to
$3.42 billion.
In all, Berkshire's operating profit fell to $4.55 billion, or
$2,769 a Class A share, in the third quarter, from $4.72 billion,
or $2,876 a share, a year earlier.
On the bottom line, its net income surged to $9.43 billion, or
$5,737 a share, compared with $4.62 billion, or $2,811 a share, a
year earlier.
Revenue rose 15% to $58.99 billion.
Analysts surveyed by Thomson Reuters projected operating
earnings of $2,720.60 a share and revenue of $61.19 billion.
The company's book value, a measure of net worth, rose 3.3% to
$151,083 a share for the first nine months of the year, compared
with a 7.1% increase in the year-ago period. Of Berkshire's 10 top
stock holdings, according to regulatory filings, only two--Wells
Fargo & Co. and General Motors Co.--have increased in value
over the past 12 months.
Meanwhile, Berkshire's "float," the engine that has fueled its
expansion, rose to $86.2 billion as of Sept. 30 from $83 billion a
year earlier.
Class A shares, down about 10% this year, edged down 0.1% in
after-hours trading.
Write to Maria Armental at maria.armental@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 06, 2015 17:05 ET (22:05 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
Berkshire Hathaway (NYSE:BRKA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Berkshire Hathaway (NYSE:BRKA)
Historical Stock Chart
From Apr 2023 to Apr 2024