Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRK.A; BRK.B) said Friday after the markets closed that its first quarter profit more than doubled from last year, helped by improved results at its insurance units and huge derivative gains.
Insurance underwriting generated operating earnings of $54 million in the first quarter, compared to an operating loss of $821 million in the same quarter last year. The year-ago quarter includes estimated after-tax losses from catastrophes such as earthquakes in Japan and New Zealand and floods and a cyclone in Australia of about $1.1 billion. Berkshire's insurance group include GEICO and General Re among others.
Insurance investment income for the quarter fell 17% to $791 million from $952 million a year ago.
First quarter operating earnings from the company's non-insurance businesses rose 28% to $2.00 billion from $1.56 billion a year ago. Railroad earnings for the quarter grew 15.5% to $701 million, while manufacturing, services and retailing earnings surged 53% to $854 million.
Berkshire completed its acquisition of railroad operator Burlington Northern Santa Fe in February 2010 and lubricant maker Lubrizol Corp. in September 2011.
The Omaha, Nebraska-based company reported net earnings for the first quarter of $3.25 billion or $1,966 per Class A equivalent share, compared to $1.51 billion or $917 per Class A equivalent share for the year-ago quarter.
Operating earnings, which exclude investment and derivative gains and losses, rose to $2.67 billion or $1,615 per Class A equivalent share in the first quarter from $1.59 billion or $966 per Class A equivalent share in the prior year quarter.
Total revenue for the first quarter rose 13% to $38.15 billion from $33.72 billion in the same quarter last year.
Berkshire ended the quarter with cash and cash equivalent of $37.83 billion, down from $41.18 billion a year ago but up from $37.30 billion at the end of full year 2011.
Berkshire's results came slightly more than 2 weeks after Buffett revealed that he has been diagnosed with stage I prostate cancer that is "not remotely lifethreatening or even debilitating in any meaningful way." Buffet and his doctors have planned for a two-month treatment of daily radiation beginning mid-July.
The news of Buffett's illness has intensified speculations about Buffet's successor. The "Oracle of Omaha" said in February that the Berkshire board has identified an individual to succeed him as CEO. The only information Buffett gave was that the person was for a long time seen as a potential candidate by the board. The incumbent would be from one of heads of Berkshire's operating companies.
Investors see one among the three Berkshire executives as the possible successor to Buffett, namely, Ajit Jain, Berkshire's reinsurance head; Matt Rose, the head of the company's railroad operation; and Gregory Abel, the head of Berkshire's MidAmerican Energy.
Buffett, who is also one of the world's richest men, has run Berkshire for nearly five decades. He owns more than $40 billion of stock in Berkshire, which has over 80 units with businesses as varied as insurance, restaurants, furniture, clothing, candy companies, natural gas, railroad and corporate jet leasing.
Berkshire also holds significant stakes in many top-notch companies such as Coca-Cola Co. (KO), Wells Fargo & Co. (WFC), American Express Co. (AEP), International Business Machines Corp. (IBM), Intel Corp. (INTC), Visa, Inc. (V) and Procter & Gamble Co. (PG) among others.
The fair value of Berkshire's equity portfolio was $89.12 billion as of March 31, 2012, up from $76.99 billion as of December 31, 2011.
Berkshire's annual shareholders meeting is scheduled on Saturday, May 4.
Berkshire's Class A shares closed Friday's regular trading session at $121,950, up $150. The company's Class B shares closed the day's session at $80.94, down 32 cents, but gained 6 cents in after hours trading.
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by RTT Staff Writer
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