Berkshire profit rises 46 percent, helped by economy

Warren Buffett's Berkshire Hathaway Inc on Friday said second-quarter profit rose 46 percent, boosted by improved demand in such businesses as car insurance, energy and railroads, as well as gains from investments and derivatives. Operating results topped analyst forecasts, reflecting how many of Berkshire's more than 80 businesses are benefiting from growth, however modest, in the US economy.
"It's about as good as you could expect," said Jeff Matthews, a Berkshire shareholder and author of "Secrets in Plain Sight: Business and Investing Secrets of Warren Buffett." "Berkshire's earnings are very similar to the economy - not shooting the lights out but still growing." Buffett, who turns 83 later this month, has run Omaha, Nebraska-based Berkshire since 1965, and favours businesses with consistent earnings power. In June, he spent $12.3 billion to buy part of H.J. Heinz Co, the maker of ketchup and Ore-Ida potato products. A month earlier, the world's fourth-richest person told shareholders at that in looking for companies to buy, "we're going to find most of our opportunities in the United States."
Quarterly net income for Berkshire rose to $4.54 billion, or $2,763 per Class A share, from $3.11 billion, or $1,882 per share, a year earlier. Operating profit rose 5 percent to $3.92 billion, or $2,384 per Class A share, from $3.72 billion, or $2,252 per share. Analysts on average expected operating profit of $2,170 per share, according to Thomson Reuters I/B/E/S. Revenue rose 16 percent from a year ago to $44.69 billion. Book value per Class A share, Buffett's preferred measure of growth, rose 2 percent from the end of March to $122,900.
Profit rose 10 percent at the Burlington Northern Santa Fe railroad to $884 million as higher revenue from shipping consumer products, industrial products and coal offset lower revenue from agricultural products. Rising prices and higher customer loads helped drive a 10 percent increase in profit from its MidAmerican Energy utilities and energy unit to $279 million. Meanwhile, pretax underwriting gains more than doubled at the Geico car insurance unit to $336 million, as premiums earned grew by 11 percent while underwriting expenses fell. Businesses benefiting from growing sales included the NetJets corporate plane unit, the Clayton Homes manufactured housing unit, and the Forest River recreational vehicle unit.