Buffett`s firm releases details of $3.6B 1Q profit

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Buffett`s firm releases details of $3.6B 1Q profit

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^By JOSH FUNK=
^AP Business Writer=
  OMAHA, Nebraska (AP) _ Berkshire Hathaway Inc. said Friday it
benefited from an improving economy and investment gains related to
its acquisition of BNSF railroad in the first quarter as it
rebounded from last year`s loss to deliver $3.6 billion in net
income.
  Berkshire said it earned $2,272 per Class A share during the
quarter. That`s after last year`s loss of $1.5 billion, or $990 per
share, as it wrote down the value of its ConocoPhillips investment.
  Chairman and CEO Warren Buffett discussed the highlights of
Berkshire Hathaway`s quarterly earnings at last Saturday`s
shareholders` meeting but didn`t release detailed information about
the quarter until Friday.
  The four analysts surveyed by Thomson Reuters expected Berkshire
to report earnings per share of $1,101.83 on average.
  Berkshire officials don`t typically comment on earnings reports
and they didn`t immediately respond to a message Friday.
  Berkshire`s revenue grew to $32 billion in the first quarter from
last year`s $22.8 billion.
  The addition of Burlington Northern Santa Fe railroad helped
boost Berkshire`s net income in two ways.
  Berkshire adjusted the value of its BNSF holdings after
completing the acquisition in February for a $979 million paper
gain. It held 76.8 million shares of BNSF stock before the deal.
  The addition of Burlington Northern also added $282 million net
income for Berkshire between the day the acquisition closed on Feb.
12 and the day the quarter ended on March 31.
  Buffett has said the quarterly results showed that the economy is
improving because Berkshire`s manufacturing and retail income grew
85 percent to $477 million. Most of the improvement in that sector
came from manufacturing businesses like the Iscar tool makers,
apparel companies like Fruit of the Loom, and luxury good sellers
like Forest River RVs and Berkshire`s jewelry businesses.
  Justin Fuller, who is a partner with Midway Capital Research &
Management in Chicago, said Berkshire`s results should be
encouraging for people worried about the economy.
  `As goes the United States, goes Berkshire. It`s just become a
much more economically sensitive company than it used to be,` said
Fuller, who writes about Berkshire online at www.buffettologist.com.
  Berkshire`s utilities and insurance companies, which include
Geico and General Reinsurance, delivered solid results that improved
slightly over last year.
  Insurance underwriting profit increased to $226 million from last
year`s $202 million.
  Berkshire`s utilities, led by MidAmerican Energy, added $223
million net income, up from $203 million a year ago.
  Morningstar analyst Bill Bergman said Berkshire`s operating
businesses are definitely improving, but there is still room to grow
because the businesses tied to housing, such as Shaw carpet, Acme
brick and Benjamin Moore paint, have yet to see much increase.
  `They`re not hitting on all cylinders, but they`re hitting on a
lot more of them these days,` Bergman said.
  Berkshire`s report suggests that it sold some of its stake in
Procter & Gamble during the quarter to help raise cash for the $26.7
billion BNSF acquisition. Berkshire said the cost basis for its
Procter & Gamble shares fell to $4.5 billion at the end of March
from $5 billion at the end of 2009.
  But even after the BNSF deal, Berkshire finished the quarter with
$25.7 billion cash on hand. That`s slightly higher than the $25.6
billion it held at the same time last year and less than the $30.6
billion Berkshire held at the start of 2010.
  Last year`s quarterly loss included a $1.9 billion charge from
writing down Berkshire`s ConocoPhillips investment, and a largely
unrealized $986 million paper loss on its derivatives portfolio.
  This year`s first-quarter results included a $267 million gain on
the value of Berkshire`s derivatives.
  Berkshire executives say the company`s operating earnings are a
better measure of how the company is performing in any given period
because those figures exclude its derivatives and investment gains
or losses. Berkshire said its operating earnings increased to $2.2
billion in this year`s first quarter, up from last year`s $1.7
billion.
  Berkshire owns roughly 80 businesses, including clothing,
insurance, furniture, utility, jewelry and corporate jet companies.
Berkshire also has big investments in companies including Coca-Cola
Co. and Wells Fargo & Co.
  ___
  On the Net:
  Berkshire Hathaway Inc.: http://www.berkshirehathaway.com
 


By Associate Press     Date   08/05/10   Time   7:50:44