Berkshire Hathaway Inc on Saturday said its quarterly operating profit fell more than analysts expected, as weakness in insurance underwriting, a slowing economy and trade woes weighed on the conglomerate run by billionaire Warren Buffett. Berkshire's auto insurer Geico suffered a larger number of accident claims, while competition from foreign producers, lower imports and "trade policy" dampened cargo volumes for consumer and agricultural products at its BNSF railroad.
Earnings also barely budged at Berkshire's manufacturing businesses, where US tariffs hurt sales of gas turbine and pipe products at its Precision Castparts unit, and its service and retailing businesses. Second-quarter operating profit declined 11% to $6.14 billion, or roughly $3,757 per Class A share, from $6.89 billion, or roughly $4,190 per Class A share, a year earlier.
Analysts on average expected operating profit of $3,851.28 per share, according to Refinitiv IBES. Berkshire also said quarterly net income rose 17% to $14.07 billion, or $8,608 per Class A share, from $12.01 billion, or $7,301 per Class A share, a year earlier, reflecting higher unrealized gains on Berkshire's investments. A US accounting rule requires Berkshire to report such gains with earnings. That rule adds volatility to Berkshire's net results, and Buffett says it can mislead investors.
Berkshire ended June with $122.4 billion of cash and equivalents, reflecting Buffett's 3-1/2-year drought in finding big acquisitions since buying Precision Castparts. He has instead invested elsewhere, building a $50.5 billion stake in iPhone maker Apple Inc and committing $10 billion in April to help Occidental Petroleum Corp buy rival Anardako Petroleum Corp. Berkshire has also bought back $2.1 billion of its stock this year.
The Omaha, Nebraska-based conglomerate operates more than 90 businesses that also include Dairy Queen ice cream, Fruit of the Loom underwear, and its namesake energy company and real estate brokerage. It also owns dozens of stocks, including Bank of America Corp, Wells Fargo & Co and Coca-Cola Co.
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