OMAHA, Neb. – Berkshire Hathaway’s first-quarter profit grew 8 per cent largely because of the way it had to account for its Duracell acquisition on paper, but profits fell at its BNSF railroad and at its insurance units.
CEO Warren Buffett offered a preview of the first-quarter results at the company’s annual meeting Saturday although Berkshire won’t release its full report until next Friday.
Berkshire earned $5.589 billion, or about $3,400.89 per Class A share. That’s up from $5.16 billion, or $3,143 per Class A share, last year.
During the first quarter, Berkshire traded roughly $3.8 billion worth of Procter & Gamble stock for Duracell and about $1.7 billion cash. That boosted the paper value of Berkshire’s investments and derivatives to $1.85 billion this year compared to $920 million last year.
Berkshire also completed its $32 billion acquisition of Precision Castparts during the quarter. The maker of components for aircraft, power plants and other industries displayed some of its products at the meeting Saturday.
Buffett said those two big acquisitions didn’t add a significant amount to the quarterly results because they were completed part way through the period.
Buffett has said operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely.
“We make investment decisions on the basis of what will make the best investment decisions,” Buffett said.
Berkshire’s operating earnings fell 12 per cent to $3.737 billion, or $2,273.95, from last year’s $4.244 billion, or $2,583 per Class A share.
The four analysts surveyed by FactSet expect Berkshire to report first-quarter operating earnings per Class A share of $2,746.27.
The Berkshire unit that includes BNSF and its large electric utilities contributed $1.23 billion, down from $1.47 billion last year.
Insurance underwriting profit dropped to $213 million from last year’s $480 million.
Berkshire owns more than 90 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