Berkshire profit soars 41pc to a record on investment gains

FE Team | Published: August 03, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

OMAHA, Nebraska, Aug 2 (Reuters) : Warren Buffett's Berkshire Hathaway Inc on Friday said second-quarter profit soared 41 per cent to a record high, reflecting substantial investment gains and improved results in manufacturing, service and retail businesses.
"It's clear that Warren Buffett's bet on the US economy is paying off," said Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, and a longtime Berkshire investor.
Net income rose to $6.4 billion, or $3,889 per Class A share, from $4.54 billion, or $2,763 per share, a year earlier.
Quarterly operating profit rose 11 per cent to $4.33 billion, or $2,634 per Class A share, from $3.92 billion, or $2,384 per share.
Analysts on average expected operating profit of $2,482 per Class A share, according to Thomson Reuters I/B/E/S.
Book value per share, Buffett's preferred measure of growth, has risen 5.6 per cent this year to $142,483.
Results included $1.96 billion of investment gains. Berkshire shed $2.86 billion of equities in the quarter, including a swap of a 40-year investment in former Washington Post publisher Graham Holdings Co for a Miami television station and other assets.
Accounting rules require Omaha, Nebraska-based Berkshire to report these sums with earnings, though Buffett considers the amounts in any given quarter often to be meaningless. Berkshire owns more than 80 businesses in sectors including insurance, railroads, energy, chemicals, food and clothing. Analysts have said the company's increasing diversification over the years has made its fortunes more closely tied to the overall economy. The Commerce Department reported the US economy grew at a 4 per cent annual rate from April to June.
Berkshire's diversification helped in the quarter. While profit fell 8 per cent in insurance, the company's best known business sector, earnings from other businesses grew 20 per cent.
Profit grew 29 per cent from manufacturing, service and retail operations, such as Berkshire's Lubrizol chemicals and Forest River recreational vehicle units.
Pre-tax profit doubled in apparel, helped by lower manufacturing and pension costs at Fruit of the Loom.
Profit also increased 34 per cent in energy and utilities, largely reflecting a year-end purchase of Nevada's NV Energy.