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 Third-quarter net income rose to $9.43 billion, or $5,737 per Class
A share, from $4.62 billion, or $2,811, a year earlier.
Operating profit fell 4 percent to $4.55 billion, or $2,769 per
share, from $4.72 billion, or $2,876.
Analysts on average expected operating profit of $2,720.60 per
share, according to Thomson Reuters I/B/E/S.
Among Berkshire's larger businesses, profit fell 34 percent from
insurance underwriting to $414 million, rose 12 percent at the BNSF
railroad to $1.16 billion, and rose 13 percent to $786 million at
Berkshire Hathaway Energy.
"Overall, quite decent operating earnings," said Jeff Matthews, a
principal at the Ram Partners LP hedge fund and author of
"Pilgrimage to Warren Buffett's Omaha." "Nothing wrong with that
given the weakness in the industrial side of the economy."
Berkshire has close to 90 operating businesses including the General
Re reinsurer, Lubrizol chemicals, NetJets business jets and Dairy
Queen ice cream. Buffett, 85, has run Omaha, Nebraska-based
Berkshire since 1965.
KRAFT HEINZ
Results reflected a roughly $6.8 billion pre-tax gain, or $4.4
billion after taxes, on Kraft Heinz.
Buffett helped finance the July merger that created the food
company, whose products include Oscar Mayer sandwich meats, Jell-O
and Heinz ketchup, and is its largest shareholder with 26.8 percent
stake.
Berkshire had previously owned a majority of the former H.J. Heinz
Co, and at the time of the merger had more than doubled its original
investment in just two years.
"Even given its large size, Berkshire can still pull off deals and
investments that remain meaningful," said James Armstrong, who
invests $550 million as president of Henry H. Armstrong Associates
in Pittsburgh. He said 20 percent of that sum is in Berkshire.
Private equity firm 3G Capital owns about 24.2 percent of Kraft
Heinz and has day-to-day oversight. It announced plans this week to
close seven plants and cut 2,600 jobs there.
Berkshire's gain reflects "the hard work 3G has done cutting costs
at Heinz and now Kraft," said Matthews, who recently sold his
Berkshire stock. "Warren Buffett, the billionaire, is getting richer
on cost cuts while 2,600 families are getting poorer. It's a shame."
Quarterly revenue at Berkshire rose 15 percent to $58.99 billion,
largely from Kraft Heinz.
Book value, reflecting assets minus liabilities and Buffett's
preferred growth gauge, was $151,083 per Class A share as of Sept.
30, up 0.9 percent from the end of June.
Berkshire's prior record profit was $6.4 billion in the second
quarter of 2014, also helped by a one-time gain.
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Kraft Heinz helped Berkshire offset recent struggles with large
investments such as International Business Machines Corp <IBM.N> and
American Express Co <AXP.N> and in operating units including the
Geico auto insurer, as well as losses from derivatives.
Berkshire said it had lost $2 billion on its IBM stock, or 15
percent of what it paid, as of Sept. 30 but still has "no intention"
of selling its shares.
The price of Berkshire's Class A shares is down 10 percent this
year, lagging the 2 percent gain in the Standard & Poor's 500
<.SPX>.
GEICO
Profit from insurance underwriting fell in part because of weakness
at General Re and losses on variable annuity guarantee contracts at
Berkshire Hathaway Reinsurance Group.
Geico recovered after a poor quarter, seeing pretax underwriting
gains drop just 2 percent to $258 million. Like other insurers,
Geico has experienced increased losses from accidents as people
drive more, causing it to boost premiums.
Berkshire said profit at BNSF was bolstered by "improved operating
performance," as the railroad spends $6 billion to add capacity and
improve service following shortfalls in 2014.
Buffett is working to finish Berkshire's largest purchase, a roughly
$31.7 billion takeover of aerospace parts maker Precision Castparts
Corp <PCP.N>.
Berkshire had $66.26 billion of cash as of Sept. 30. Buffett has
said he plans to spend about one-third of that on Precision
Castparts. He wants to keep a $20 billion cash cushion.
In Friday trading, Berkshire Class A shares fell $1,594 to $203,100,
and its Class B shares fell 24 cents to $136.33.
(Reporting by Jonathan Stempel and Jennifer Ablan in New York;
Editing by Bernard Orr)
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