OMAHA, Neb. – Warren Buffett’s company said Friday its first-quarter profit jumped 10 per cent on the strength of its railroad and insurance businesses.
Berkshire Hathaway Inc. earned $5.16 billion, or $3,143 per Class A share, during the first three months of 2015. That’s up from $4.71 billion, or $2,862 per Class A share, last year.
Most major Berkshire subsidiaries performed well. Revenue grew 7 per cent to $48.6 billion.
Berkshire’s BNSF railroad rebounded from last year’s service problems to generate $1.05 billion in net income, up from $724 million. Last year, BNSF dealt with severe cold weather and a backlog of shipments in several states.
The railroad’s fuel costs fell to $713 million from last year’s $1.16 billion.
Berkshire Hathaway officials do not typically comment on quarterly earnings reports, but Buffett told the Fox Business Network that BNSF had improved more quickly than he had expected.
“They’ve improved dramatically,” Buffett said.
Edward Jones analyst Jim Shanahan said some areas of Berkshire’s results were better than he expected and some were worse, but the quarter was good overall.
“That shows the strength of this business, Shanahan said.
The utility and energy division, which is led by Berkshire Hathaway Energy, generated $421 million in net income, down from $452 million in last year’s first quarter. This year’s results were helped by the $2.7 billion acquisition of Canadian power transmission provider AltaLink that was completed in December, but Berkshire’s U.S. utilities and natural gas pipeline generated less.
Berkshire’s manufacturing, service and retail businesses generated $1.12 billion in net income, up from $933 million because of acquisitions, such as the addition of the Berkshire Hathaway automotive network of 81 car dealers. Several businesses in this category, such as Forest River RV and the Nebraska Furniture Mart, reported stronger sales.
Berkshire insurance companies reported an underwriting profit of $480 million, up from $461 million a year ago. Berkshire’s sizeable insurance unit includes Geico, General Reinsurance and several other companies.
More than 40,000 people are expected to attend Berkshire’s shareholder meeting in Omaha, Nebraska, on Saturday. The crowd will fill an arena downtown and several overflow rooms to listen to Buffett and Berkshire Vice Chairman Charlie Munger answer questions for several hours.
Buffett has said Berkshire’s operating earnings are a better measure of how the company is performing in any given period, because those figures exclude the value of derivatives and investment gains or losses. In this quarter, Berkshire’s paper investment value fell significantly but the value of its derivatives improved almost enough to offset that.
Berkshire’s said its operating earnings were $4.24 billion, or $2,583 per share. That’s up from $3.53 billion, or $2,149 per share, in last year’s first quarter.
The stock analysts that follow generally base their estimates on Berkshire’s operating earnings.
The four analysts surveyed by FactSet expected Berkshire to report operating earnings per share of $2,387.79 per Class A share.
Berkshire owns more than 80 subsidiaries, including clothing, furniture and jewelry firms. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
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Berkshire Hathaway Inc.: www.berkshirehathaway.com