Berkshire quarterly profit hurt by winter weather, insurance

Fri May 2, 2014 6:49pm EDT
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By Jonathan Stempel and Luciana Lopez

OMAHA, Nebraska (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote) (BRKb.N: Quote) on Friday said quarterly profit declined 4 percent, falling short of analyst forecasts, as earnings from insurance underwriting declined and bad weather disrupted shipping at its BNSF Railway unit.

Results nonetheless benefited from strength in many businesses, including a one-third increase from underwriting at its Geico car insurance unit, and improvement at economically-sensitive businesses such as its Clayton Homes mobile home unit.

First-quarter net income fell to $4.71 billion, or $2,862 per Class A share, from $4.89 billion, or $2,977, a year earlier.

Quarterly operating profit fell 7 percent to $3.53 billion, or $2,149 per share, from $3.78 billion, or $2,302 per share.

Book value per share, Buffett's preferred measure of growth, rose 2.6 percent from year-end to $138,426 from $134,973.

Analysts on average expected operating profit of $2,172 per share, according to Thomson Reuters I/B/E/S.

Results were also hurt by an 80 percent drop in gains from derivatives, mainly related to contracts whose value grows faster when the stock market rises. Berkshire said such gains are "often meaningless" in trying to understand the company.

"It's the medium- to long-term results that count," said Mark O'Hare, a private investor from Brisbane, Australia. He said the profit shortfall is "consistent with what Mr. Buffett has always said: underwriting results will vary from year to year. The key is that it's a profitable underwriting result."   Continued...

Berkshire Hathaway shareholders walk by a video screen at the company's annual meeting in Omaha in this May 4, 2013 file photo. REUTERS/Rick Wilking/Files