Billionaire Warren Buffett's Berkshire Hathaway Inc. (BRK.A; BRK.B) said Friday after the markets closed that its first quarter profit dropped 58% from last year, hurt by huge insurance losses stemming from earthquakes in Japan and New Zealand as well as floods in Australia and Cyclone Yasi.
The Omaha, Nebraska-based company reported net earnings for the first quarter of $1.51 billion or $917 per Class A share, compared to $3.63 billion or $2,272 per Class A share for the year-ago quarter.
Excluding investment and derivative gains and losses, operating earnings for the first quarter were $1.59 billion or $966 per Class A share, compared to $2.22 billion or $1,390 per Class A share in the prior year quarter.
Total revenue for the first quarter rose 5% to $33.72 billion from $32.04 billion in the same quarter last year.
Berkshire had warned last week that it expected to report sharply lower first quarter profit due huge losses from the March 11 earthquake in Japan, as also from catastrophes in New Zealand and Australia. Friday's results matched the preliminary figures announced on April 30.
Insurance underwriting generated an operating loss of $821 million in the first quarter, compared to operating earnings of $226 million in the same quarter last year. Berkshire's insurance group include GEICO and General Re among others. The latest quarter operating loss include an estimated pre-tax catastrophe losses of about $1.7 billion from Japan and New Zealand earthquakes and Australian floods and Cyclone Yasi.
Insurance investment income for the quarter fell 4% to $952 million from $988 million a year ago.
First quarter operating earnings from the company's non-insurance businesses rose 133% to $1.56 billion from $1.05 million a year ago. Both the periods include results of Burlington Northern Santa Fe that was acquired in February last year.
The company also said it recorded other-than-temporary impairment losses in earnings of $506 million in the 2011 first quarter related to certain equity securities, including $337 million related to its investments in Wells Fargo & Co. (WFC).
Berkshire, which is now a constituent of the S&P 500 index, is a holding company owning subsidiaries that engage in a number of diverse business activities including property and casualty insurance and reinsurance, utilities and energy, finance, manufacturing, services, retailing and railroad.
The company 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) and Procter & Gamble Co. (PG) among others.
In March, Berkshire announced a definitive deal to buy lubricant maker Lubrizol Corp. (LZ) for $135 per share or for a total value of about $9.7 billion, including $0.7 billion in net debt.
However, the deal has taken its toll on the company. David Sokol, who was seen as a strong contender to succeed Warren Buffett, unexpectedly resigned from the company later that month over insider-trading allegations.
Berkshire said last month that its audit committee has determined that Sokol violated the company's standards of business ethics and its insider trading policies by purchasing shares of Lubrizol while serving as a Berkshire representative in connection with a possible business combination.
Berkshire said Friday that it currently expects the deal to close in the third quarter of 2011.
Berkshire's Class A shares closed Friday's regular trading session at $120, 280, up $925. The company's Class B shares closed the day's session at $80.21, up 55 cents but lost 10 cents in after hours trading.
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