February 27, 2016 / 1:30 PM / 2 years ago

Warren Buffett's Berkshire Hathaway quarterly profit jumps almost one third

(Reuters) - Warren Buffett’s Berkshire Hathaway Inc on Saturday said fourth-quarter profit rose 32 percent, helped by improved results in its insurance operations and higher gains from investments and derivatives.

Net income rose to $5.48 billion, or $3,333 per Class A share, from $4.16 billion, or $2,529 per share, a year earlier.

Quarterly operating profit rose 18 percent to $4.67 billion, or $2,843 per share, from $3.96 billion, or $2,412 per share.

Analysts on average had forecast operating profit of $2,814 per share, according to Thomson Reuters I/B/E/S. Revenue rose 7 percent to $51.82 billion.

Book value per share, which reflects assets minus liabilities and which Buffett considers a good yardstick for Berkshire’s intrinsic worth, rose 3 percent from the end of September, to $155,501.

For all of 2015, profit rose 21 percent to $24.08 billion, or $14,656 per share. The gain from the merger that created Kraft Heinz Co prevented profit from edging lower, Berkshire said. Operating profit rose 5 percent to $17.36 billion, or $10,564 per share.

Buffett, 85, has run Omaha, Nebraska-based Berkshire for nearly 51 years. He has transformed it from a failing textile company into a conglomerate with roughly 90 businesses in such areas as insurance, railroads, energy, food, apparel and real estate.

Buffett’s largest-ever acquisition, the $32 billion purchase of industrial parts maker Precision Castparts Corp, closed last month. It ended the year with $71.73 billion of cash.

Berkshire expects on Monday to close its acquisition of Procter & Gamble Co’s Duracell battery business, in exchange for P&G shares that Berkshire now owns.

Quarterly profit from insurance operations rose 25 percent to $1.34 billion, as improvement in reinsurance offset higher claims payouts in the Geico auto insurance unit.

Berkshire said gains from investments and derivatives quadrupled to $805 million. This in part reflected profits on stock sales and gains on long-term options contracts whose value is tied to the performance of the stock market.

Profit at the BNSF railroad unit fell 9 percent to $1.08 billion, reflecting lower demand, especially in coal and some industrial products, as oil prices fell.

Buffett said BNSF’s profit could decline further in 2016.

Berkshire’s insurance units ended 2015 with $87.7 billion of float, the amount of premiums held before claims are paid, Buffett said. Berkshire uses float to help fund acquisitions and other investments.

The company has well over $100 billion of equity investments.

Berkshire said it plans to keep its big stake in IBM Corp despite a $2.6 billion paper loss as of Dec. 31.

In Friday trading, Berkshire’s Class A shares closed at $198,190.50, and its Class B shares closed at $131.92. Both are nearly unchanged this year.

Reporting by Jonathan Stempel in New York; Editing by Nick Zieminski and Leslie Adler

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