Berkshire Hathaway profit jumps 25 percent

Warren Buffett’s Berkshire Hathaway saw its earnings and operating profit rise 25% in the second quarter, thanks to a combination of the positive impact of investment gains and acquisitions which offset weak returns from its big railway unit and some parts of its manufacturing arm.

Berkshire said net income for the quarter rose to $US5 billion, from $US4.01 billion, in the second quarter of 2015. The Company conducts insurance businesses on both a primary basis and a reinsurance basis, a freight rail transportation business and a group of utility and energy generation and distribution businesses.

Berkshire shares have climbed 10 percent this year to $218,010 at 4 p.m.in NY compared with the 6.8 percent gain in the S&P 500 Index. The statement was released after the close of regular trading.

Analysts on average expected operating profit of about $2,911 per share, according to Thomson Reuters I/B/E/S. Pretax underwriting profit nearly tripled at the Geico unit to $US150 million as the auto insurer added customers and increased rates.

Investments and derivatives overall generated $394 million of profit, compared with $123 million a year earlier.

Manufacturing and service sector income was mainly supported by Duracell and Precision, which increased 14% to $1.49 billion. They’ve gained 10% this year.

Most resulted from Kraft Heinz’s redemption of $8.32 billion of preferred stock that Berkshire held.

BNSF saw profit fall 20 per cent to $772 million and revenue drop 15 per cent to $4.59 billion, though speed and on-time performance improved following costly capital upgrades in 2015. “With oil at low production levels, along with pipeline displacement, we expect comparative volume declines in petroleum-related categories for the remainder of 2016”. The business operates electric grids in the United Kingdom, natural gas pipelines that stretch from the Great Lakes to Texas and power companies in states including Iowa and Nevada. Berkshire Hathaway reports financial results Friday, Aug. 5, 2016. Some of Buffett’s biggest holdings – including Wells Fargo, American Express and Phillips 66 – fell in the quarter. The extra funds add to Buffett’s resources for another major acquisition. We believe that the company is in a really good position right now as the stockpile of cash means it is poised for its favorite job: takeovers.