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OMAHA, Neb. (Reuters) - Warren Buffett's Berkshire Hathaway Inc on Friday said first-quarter profit rose 10 percent, and operating results easily beat forecasts, boosted by its railroad and insurance businesses and gains from derivatives.
Net income for the Omaha, Nebraska-based insurance and investment conglomerate rose to $5.16 billion, or $3,143 per share, from $4.71 billion, or $2,862, a year earlier.
Quarterly operating profit increased 20 percent to $4.24 billion, or $2,583 per share, from $3.53 billion, or $2,149. Analysts on average expected operating profit of about $2,373 per share, according to Thomson Reuters I/B/E/S.
Revenue rose 7 percent to $48.64 billion. Book value per share, Buffett's preferred measure of growth, rose 0.5 percent from year-end to $146,963.
Cathy Seifert, an analyst at S&P Capital IQ, called results "really strong," in contrast to many companies in sectors where Berkshire competes that have posted "middling" performance.
Results were released one day before Berkshire's annual meeting in Omaha, where shareholders are expected to celebrate Buffett's 50th anniversary at Berkshire's helm.
Buffett and Berkshire Vice Chairman Charlie Munger will field five hours of questions at the meeting, which is expected to draw more than 40,000 shareholders. It is part of a weekend of events throughout Omaha that Buffett calls "Woodstock for Capitalists."
Once a struggling textile mill, Berkshire now has more than 80 operating companies in the energy, food, industrial products, insurance, railroad and other sectors, and owns more than $115 billion of stocks.
Profit from the Burlington Northern Santa Fe railroad totaled $1.05 billion, up 44 percent from a year earlier, when bad weather and congestion led to what Berkshire called "substandard" service that left many customers unhappy.
Berkshire attributed the better performance this year to increased capacity, new equipment and other upgrades made as part of a $6 billion capital improvement program that will continue this year.
"It's good to see the railroad recovering. That's the most important driver here," said Jeff Matthews, who runs the Ram Partners hedge fund in Naples, Florida, owns Berkshire shares in his own account, and has written several books about Buffett.
Berkshire recorded $857 million of profit from derivatives, primarily from contracts that will benefit Berkshire if stock markets rise over the long-term. The stronger U.S. dollar added to these gains by reducing liabilities under contracts denominated in foreign currencies.
Accounting rules require Berkshire to report derivatives gains with quarterly results. Buffett downplays their importance, saying they do not reflect business performance.
Currency fluctuations also boosted results at a unit that insures against major catastrophes, contributing to a 15 percent overall profit jump in insurance to $1.36 billion.
Not all insurance businesses fared well. Underwriting profit at the auto insurer Geico fell 55 percent as it paid out more to cover claims, causing it to increase premium rates.
Jeff Hull, senior financial adviser at Manulife Securities Inc in Toronto, said Geico is facing pressures from rivals that are slashing prices. "I would like to see it a bit stronger," said Hull, who owns Berkshire shares. "Overall the company is still doing okay."
Meanwhile, the General Re reinsurer lost money from underwriting, as it struggled with price competition, higher claims and currency losses in its international operations.
Among other businesses, Berkshire Hathaway Energy, a utility unit that Berkshire owns most of, saw profit fall 7 percent to $421 million, reflecting lower revenues from natural gas operations.
Berkshire also has dozens of smaller businesses that sell, among other things, Benjamin Moore paint, Borsheim's jewelry, Brooks athletic shoes, Dairy Queen ice cream, Fruit of the Loom underwear, Johns Manville insulation and See's candies.
The company ended the quarter with $63.71 billion of cash, enough to fund one or more giant acquisitions.
It will own a roughly 27 percent stake in Kraft Heinz Co after H.J. Heinz Co, now owned by Berkshire and Brazilian private equity firm 3G Capital, buys Kraft Foods Group Inc, combining Kraft, Heinz, Oscar Mayer, Philadelphia, Velveeta and other brands under one roof.
Major stock holdings, meanwhile, include American Express Co, Coca-Cola Co, International Business Machines Corp and Wells Fargo & Co.
In Friday trading, Berkshire Class A shares closed up $2,400 at $215,800, and its Class B shares rose $2.15 to $143.36.
The shares are about 6 percent below their record highs set last Dec. 8. Berkshire's market value is roughly $355 billion, ranking fifth among publicly-traded U.S. companies.
Reporting by Luciana Lopez and Jonathan Stempel in Omaha, Nebraska; Additional reporting by Jennifer Ablan; Editing by Bernard Orr