Berkshire profit soars 41 pct to a record on investment gains

Fri Aug 1, 2014 6:58pm EDT
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By Jonathan Stempel and Luciana Lopez

(Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote) (BRKb.N: Quote) on Friday said second-quarter profit soared 41 percent to a record high, reflecting substantial investment gains and improved results in manufacturing, service and retail businesses.

"It's clear that Warren Buffett's bet on the U.S. economy is paying off," said Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, and a longtime Berkshire investor.

Net income rose to $6.4 billion, or $3,889 per Class A share, from $4.54 billion, or $2,763 per share, a year earlier.

Quarterly operating profit rose 11 percent to $4.33 billion, or $2,634 per Class A share, from $3.92 billion, or $2,384 per share.

Analysts on average expected operating profit of $2,482 per Class A share, according to Thomson Reuters I/B/E/S.

Book value per share, Buffett's preferred measure of growth, has risen 5.6 percent this year to $142,483.

Results included $1.96 billion of investment gains. Berkshire shed $2.86 billion of equities in the quarter, including a swap of a 40-year investment in former Washington Post publisher Graham Holdings Co (GHC.N: Quote) for a Miami television station and other assets.

Accounting rules require Omaha, Nebraska-based Berkshire to report these sums with earnings, though Buffett considers the amounts in any given quarter often to be meaningless. Berkshire owns more than 80 businesses in sectors including insurance, railroads, energy, chemicals, food and clothing. Analysts have said the company's increasing diversification over the years has made its fortunes more closely tied to the overall economy. The Commerce Department reported the U.S. economy grew at a 4 percent annual rate from April to June.   Continued...

Berkshire Hathaway CEO Warren Buffett listens to a shareholder at the Berkshire-owned Borsheims jewelry store where Buffett was selling jewelry as part of the company annual meeting weekend in Omaha, Nebraska May 4, 2014.  REUTERS/Rick Wilking