Berkshire profit up 25 percent as insurance helps, BNSF weighs

Fri Aug 5, 2016 6:29pm EDT
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By Jonathan Stempel

(Reuters) - Berkshire Hathaway Inc on Friday said its second-quarter profit rose 25 percent, helped by improvement in insurance underwriting, investment gains and the purchase of Precision Castparts Corp, Warren Buffett's largest acquisition.

But operating results fell short of analyst forecasts, as depressed oil prices and coal demand weighed on volume at the conglomerate's BNSF railroad unit, while units serving the oil, gas and heavy equipment industries struggled. Other businesses, including the Geico auto insurer, fared better.

Net income for Omaha, Nebraska-based Berkshire rose to $5 billion, or $3,042 per Class A share, from $4.01 billion, or $2,442, a year earlier.

Operating profit rose 18 percent to $4.61 billion, or $2,803 per Class A share, from $3.89 billion, or $2,367.

Analysts on average expected operating profit of about $2,911 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 6 percent to $54.46 billion. Book value per share, Buffett's preferred measure of growth, rose 1.7 percent from the end of March to $160,009.

Buffett has over the years diversified Berkshire far beyond its insurance roots, including through the $32.1 billion January purchase of Precision Castparts, which makes aircraft parts, and February acquisition of Duracell, which makes batteries.

But many operations remain anchored in the United States, and several struggled with the same pressures stemming from low commodities and materials prices and demand.   Continued...

Warren Buffett, Chairman, CEO and largest shareholder of Berkshire Hathaway takes part in interviews before a fundraising luncheon for the nonprofit Glide Foundation in New York September 8, 2015.  REUTERS/Lucas Jackson/File Photo