Berkshire profit rises 51%, shares at record high
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(Reuters) -- Berkshire Hathaway Inc. on Friday said quarterly profit rose nearly 51% on a solid performance in insurance and by many of its other businesses, as well as gains from investments and derivatives.
The results topped expectations and were released after Berkshire shares closed at a record high.
Berkshire's more than 80 businesses are benefiting from a strengthening economy, as illustrated by increased traffic on its Burlington Northern railroad unit, new customers for its McLane food distribution business, and stepped-up demand for its Forest River recreational vehicles, to name just a few.
Profit from insurance operations roughly doubled.
“The happy fact right now is that the growth areas in the economy are right in Berkshire's wheelhouse,” said Jeff Matthews, founder of the RAM Partners L.P. hedge fund and author of “Pilgrimage to Warren Buffett's Omaha.”
Berkshire released its results a day before Buffett and Berkshire Vice Chairman Charlie Munger will field five hours of shareholder questions at the company's annual meeting in its hometown of Omaha, Nebraska.
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Net income increased to $4.89 billion from $3.25 billion a year earlier. Quarterly operating profit rose 42% to $3.78 billion. Operating profit from insurance operations rose to $1.7 billion from $845 million.
Nearly all the improvement came from underwriting, where profit rose to $901 million from $54 million, in part because of a $255 million pre-tax reinsurance gain, as well as currency fluctuations.
“The backbone of Berkshire is its world class collection of insurance companies,” said David Rolfe, chief investment officer at Wedgewood Partners Inc., which invests 6.5% of its $4 billion of assets in Berkshire stock.
Operating profit from noninsurance business rose 12% to $2.25 billion.
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