Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRK.A; BRK.B) said Friday after the markets closed that its second quarter profit fell 9% from last year, hurt by higher derivative losses.
However, the company's operating earnings, which exclude investment and derivative gains and losses, rose 38% from last year.
The company's insurance underwriting businesses generated operating earnings of $619 million in the second quarter, compared to an operating loss of $7 million in the same quarter last year. Berkshire's insurance group include GEICO and General Re among others.
Insurance investment income for the quarter rose 7% to $1.07 million from $995 million a year ago.
Second quarter operating earnings from the company's non-insurance businesses rose 22% to $2.20 billion from $1.80 billion a year ago. Railroad earnings for the quarter grew 16% to $802 million, while manufacturing, services and retailing earnings surged 30% to $1.03 billion.
Berkshire completed its acquisition of railroad operator Burlington Northern Santa Fe in February 2010 and lubricant maker Lubrizol Corp. in September 2011.
Berkshire said its book value has increased by 7.5% since the beginning of the year to $107,377 per Class A equivalent share.
The company ended the quarter with cash and cash equivalent of $40.66 billion, down from $47.89 billion a year ago but up from $37.30 billion at the end of full year 2011 and up from $37.83 billion at the end of the first quarter of 2012.
The Omaha, Nebraska-based company reported net earnings for the second quarter of $3.11 billion or $1,882 per Class A equivalent share, compared to $3.42 billion or $2,072 per Class A equivalent share for the year-ago quarter.
Operating earnings rose to $3.72 billion or $2,252 per Class A equivalent share in the second quarter from $2.70 billion or $1,640 per Class A equivalent share in the prior year quarter.
Total revenue for the second quarter grew 0.7% to $38.55 billion from $38.27 billion in the same quarter last year.
In April, Buffett revealed that he had been diagnosed with stage I prostate cancer that is "not remotely lifethreatening or even debilitating in any meaningful way." Buffet and his doctors had planned for a two-month treatment of daily radiation beginning mid-July.
The news of Buffett's illness ntensified 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.
Berkshire's Class A shares closed Friday's regular trading session at $128,479, up $2,189 or 1.73%. The Class A shares are losing 0.01% in after hours trading. The company's Class B shares closed the day's session at $85.58, up $1.50 or 1.78%. The Class B shares are gaining 1.18% in after hours trading.
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by RTT Staff Writer
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