Berkshire Hathaway Reports Higher Revenue
November 04 2016 - 05:30PM
Dow Jones News
Berkshire Hathaway Inc.'s third-quarter operating profit and
revenue rose, driven by its businesses in manufacturing, utilities
and energy.
Net income, however, declined as the Nebraska-based conglomerate
recorded lower investment gains. A year ago, Berkshire benefited
from a $4.4 billion gain from its Kraft Heinz investment.
The conglomerate, led by renowned investor Warren Buffett, pulls
in money from a railroad, utilities, industrial manufacturers, home
builders, branded-food sellers and even an auto dealership. In
addition, the 86-year-old Nebraska tycoon, whose shrewd investments
have earned him the nickname "the Oracle of Omaha," has turned to
acquisitions as a way to drive profit.
This year, Berkshire bought aircraft-parts supplier Precision
Castparts Corp., in what was its largest acquisition to date.
Precision Castparts—among Berkshire's largest holdings, along with
American Express Co., Coca-Cola Co., Wells Fargo & Co. and IBM
Corp.—forms part of Berkshire's most profitable noninsurance
businesses, the so-called Powerhouse Six.
Still, the insurance business, the engine that has fueled
Berkshire's expansion, remains at the core of its moneymaking
machine. Insurance brings in billions of dollars of "float,"
upfront premiums customers pay and that Berkshire invests for its
own gain.
Insurance float rose to $91 billion in the most recent
period.
Meanwhile, the operating profit of its insurance underwriting
business, which includes Geico Corp., fell 34% to $272 million.
Insurance-investment income's operating profit improved to $850
million, while operating profit at the noninsurance
businesses—which include the railroad, utilities and energy
segments—rose 38% to $2.04 billion.
Over all, profit fell 24% to $7.2 billion, or $4,379 a Class A
share, while operating profit, which excludes some investment
results, rose 7% to $4.85 billion, or $2,951 a Class A share.
Revenue edged up to $59.07 billion from $58.99 billion.
Analysts surveyed by Thomson Reuters had projected operating
profit of $3,058.10 a Class A share on $57.04 billion in
revenue.
Berkshire reported $2.35 billion in investment gains in the
third quarter, down sharply from the year-ago period but helped by
an after-tax gain of roughly $1.6 billion from the sale of its
crisis-era investment in Wrigley as Mars Inc. combines its
chocolate and chewing gum operations into Mars Wrigley
Confectionery.
Book value, Mr. Buffett's preferred yardstick for measuring net
worth, rose 5.3% to $163,783 per Class A equivalent share as of
Sept. 30. Last year, Berkshire reported a 3.3% increase in book
value for the first nine months of the year.
Class A shares closed Friday at $214,545, up 8% this year, while
Class B shares have gained another 8% to $142.95.
Berkshire created the B shares, known as "Baby Berkshires" or
"Baby Bs," in 1996 to make the company's stock more accessible to
investors.
Write to Maria Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
November 04, 2016 17:15 ET (21:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Coca Cola (NYSE:KO)
Historical Stock Chart
From Feb 2024 to Mar 2024
Coca Cola (NYSE:KO)
Historical Stock Chart
From Mar 2023 to Mar 2024