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Berkshire Profit Jumps 72% On Railroad, Utility


Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRK.A; BRK.B) said Friday after the markets closed that its third quarter profit jumped 72% from last year, helped by investment gains as well as higher earnings from its railroad, utility and energy businesses.

However, the company's operating earnings for the quarter, which exclude investment and derivative gains and losses, fell 11% from a year earlier.

The company's insurance underwriting businesses generated operating earnings of $392 million in the third quarter, down 64% from $1.09 billion in the same quarter last year. Berkshire's insurance group include GEICO and General Re among others.

Insurance investment income for the quarter fell 6% to $733 million from $783 million a year ago.

Third quarter operating earnings from the company's non-insurance businesses rose 19% to $2.47 billion from $2.08 billion a year ago. Railroad earnings for the quarter increased 22% to $991 million, while earnings from utilities and energy grew 18% to $438 million. Manufacturing, services and retailing earnings surged 19% to $991 million.

Berkshire completed its acquisition of railroad operator Burlington Northern Santa Fe in February 2010 and lubricant maker Lubrizol Corp. in September 2011.

Earlier Friday, Berkshire said that it will acquire Oriental Trading Co., the Omaha-based direct retailer of value-priced party supplies, arts and crafts, school supplies, toys and novelties. Financial details of the deal were not disclosed. The deal is expected to close by the end of this month.

The company's book value increased to $111,718 per Class A equivalent share at September 30 from $107,377 per Class A equivalent share at June 30.

The company ended the quarter with cash and cash equivalent of $47.78 billion, up from $34.78 billion a year ago and up from $40.66 billion at the end of the prior quarter.

The Omaha, Nebraska-based company reported net earnings for the third quarter of $3.92 billion or $2,373 per Class A equivalent share, compared to $2.28 billion or $1,380 per Class A equivalent share for the year-ago quarter.

Operating earnings fell to $3.40 billion or $2,057 per Class A equivalent share in the third quarter from $3.81 billion or $2,309 per Class A equivalent share in the prior year quarter.

Total revenue for the third quarter rose 22% to $41.05 billion from $33.74 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. 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.

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), Visa, Inc. (V) and Procter & Gamble Co. (PG) among others.

Berkshire's Class A shares closed Friday's regular trading session at $130,550, down $850. The company's Class B shares closed the day's session at $86.90, down 75 cents. The Class B shares are currently losing 0.06% in after hours trading.

by RTTNews Staff Writer

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