INSUBCONTINENT EXCLUSIVE:
Authors: Super UserOMAHA: Berkshire Hathaway Inc on Saturday ended its more than year-long stretch of falling operating profit, while a new
accounting rule caused the conglomerate chaired by Warren Buffett to suffer an overall net loss.
The results were released on the same day
Berkshire is holding its annual meeting in Omaha, Nebraska, where Buffett, 87, and Vice Chairman Charlie Munger, 94, will answer five hours
of questions from shareholders, journalists and analysts.
Operating profit, which excludes investment and derivative gains and losses, rose
49 percent to $5.29 billion, or about $3,215 per Class A share, from $3.56 billion, or $2,163 per share, a year earlier, Berkshire said.
The
net loss was $1.14 billion, or $692 per share, compared with net income of $4.06 billion, or $2,469 per share, a year earlier.
Analysts, on
average, expected operating profit of about $3,116 per Class A share, according to Thomson Reuters I/B/E/S.
Operating profit from
Berkshire's more than 90 businesses had fallen for five straight quarters, largely because of disappointing performance from insurance
underwriting, including losses tied to hurricanes.
Saturday's report also ended an eight-quarter stretch when operating results fell short
of Wall Street forecasts.
The accounting change required Berkshire to report $6.2 billion unrealized losses in its marketable stock
portfolio, which totaled $170.5 billion at year end, regardless of whether it planned to sell those stocks.
Buffett has called the new rule
a "nightmare" that would produce "truly wild and capricious swings" in bottom-line results that could, depending on the direction,
unnecessarily scare or embolden investors.
Two of Berkshire's biggest stock investments, Wells Fargo Co and Coca-Cola Co, had tough first
quarters, their shares falling 13.6 percent and 5.3 percent, respectively.
The stock price declines also weighed on Berkshire's book value,
which measures assets minus liabilities and is a favored gauge of Buffett for Berkshire's growth
Book value per Class A share fell 0.3 percent in the quarter to $211,184.
In Friday trading, Berkshire Class A shares closed at$292,600, and
the Class B shares closed at $195.64
Both are 10 percent below their record highs set on Jan
