Berkshire third-quarter profit drops on investments, operating results gain
By Luciana Lopez and Jonathan Stempel
NEW YORK (Reuters) - Warren Buffett's Berkshire Hathaway Inc BRKa.N BRKb.N said on Friday third-quarter profit fell 9 percent as it took a large writeoff on one of its investments, but operating results easily topped forecasts on improvement in its insurance, energy and railroad operations.
Net income slipped to $4.62 billion, or $2,811 per Class A share in the third quarter, from $5.05 billion, or $3,074 per Class A share, a year earlier.
Operating profit, however, rose 29 percent to $4.72 billion, or $2,876 per Class A share, from $3.66 billion, or $2,228 per Class A share.
Analysts on average expected earnings of $2,593.85 per share, according to Thomson Reuters I/B/E/S.
Much of the drop in profit came from a $107 million loss on Berkshire's investments and derivatives, compared with a year-earlier $1.39 billion gain.
During the quarter, Berkshire wrote off $678 million on its investment in Tesco Plc (TSCO.L: Quote), a British grocery chain being probed by regulators at home over accounting errors. Buffett has been reducing Berkshire's Tesco stake.
In contrast, year-earlier results included big gains on investments that Buffett made during the 2008 financial crisis, including in General Electric Co (GE.N: Quote) and Goldman Sachs Group Inc (GS.N: Quote), and bonds related to candy maker Mars Inc's purchase of rival Wrigley.
Bill Smead, chief investment officer of Smead Capital Management in Seattle, said the swing in investment results took a backseat to the strength of operations at Berkshire's more than 80 companies. Continued...