Berkshire Quarterly Profit Hurt By Weather, Insurance

[May 03, 2014]  By Jonathan Stempel and Luciana Lopez
 
 OMAHA, Nebraska (Reuters) - Warren Buffett's Berkshire Hathaway Inc <BRKa.N> <BRKb.N> on Friday said quarterly profit declined 4 percent, falling short of analyst forecasts, as earnings from insurance underwriting declined and bad weather hurt results at its BNSF Railway unit.

Results nonetheless benefited from strength in many businesses, including a one-third increase from underwriting at its Geico car insurance unit, and improvement at economically-sensitive businesses such as its Clayton Homes mobile home unit.

First-quarter net income fell to $4.71 billion, or $2,862 per Class A share, from $4.89 billion, or $2,977, a year earlier.

Quarterly operating profit fell 7 percent to $3.53 billion, or $2,149 per share, from $3.78 billion, or $2,302 per share.

Book value per share, Buffett's preferred measure of growth, rose 2.6 percent from year-end to $138,426 from $134,973.

Analysts on average expected profit of $2,172 per share, according to Thomson Reuters I/B/E/S.

Mark O'Hare, a private investor from Brisbane, Australia, said the profit shortfall is "consistent with what Mr. Buffett has always said: underwriting results will vary from year to year. The key is that it's a profitable underwriting result."

O'Hare was speaking in Omaha, Nebraska, where Buffett and Vice Chairman Charlie Munger are welcoming tens of thousands to Berkshire's annual shareholder weekend, which Buffett calls "Woodstock for Capitalists." They will field five hours of questions on Saturday at Berkshire's annual meeting.

Operating profit from insurance fell 31 percent to $1.18 billion. Much of the drop was attributable to a reinsurance business, whose lower results reflected currency fluctuations and the absence of a year-earlier gain.

Meanwhile, operating profit from noninsurance businesses rose 5 percent to $2.35 billion.

This was despite a 9 percent drop at BNSF to $724 million, which Berkshire said resulted from "severe weather conditions and service-related challenges," especially in northern U.S. states. Berkshire nonetheless projected that BNSF's profit for the rest of the year will top levels in 2013.

Revenue rose 4 percent from a year ago to $45.45 billion.

In Friday trading, Berkshire Class A shares closed down $1,173 at $192,255 after earlier hitting a record high, and the Class B shares fell 97 cents to $128.09.

(Reporting by Luciana Lopez and Jonathan Stempel in Omaha, Nebraska; Editing by Bernard Orr)

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