OMAHA, Neb. (AP) — Warren Buffett's company said Friday its first-quarter profit slipped nearly 4 percent largely because of an accounting charge in its insurance units.
Berkshire Hathaway Inc. earned $4.71 billion, or $2,862 per Class A share, during the first three months of 2014. That's down from $4.89 billion, or $2,977 per Class A share, a year earlier. Berkshire's revenue increased nearly 4 percent to $45.45 billion from $43.87 billion in the same period last year.
Berkshire said its insurance underwriting profits fell to $461 million from $901 million a year earlier largely because of a deferred charge related to some retroactive insurance policies. Losses related to foreign currency exchanges also weighed down insurance results. Berkshire said its underwriting results included a loss of $37 million in this year's quarter because of exchange rates, compared to last year's gain of $189 million on exchange rates.
Berkshire's sizeable insurance unit includes Geico, General Reinsurance and several other companies. The quarterly results will likely be well received by the more than 30,000 people expected to attend Berkshire's shareholders meeting in Omaha, Nebraska, on Saturday. The crowd will fill an arena and several overflow rooms to hear Buffett and Berkshire Vice Chairman Charlie Munger answer questions for several hours.
Most of the various parts of Berkshire delivered solid results in the quarter. The utility and energy division, which is led by Berkshire Hathaway Energy, generated $452 million net income, up from $394 million in last year's first quarter. And those figures don't include the $2.9 billion acquisition of Canadian power transmission provider AltaLink that was announced this week.
Berkshire's various manufacturing, service and retail companies generated $933 million in net income, up from $862 million last year as the economy continued improving. BNSF railroad contributed $724 million to Berkshire, but that was down from $798 million a year ago because severe winter weather slowed deliveries and forced the railroad to use shorter trains. But Berkshire predicted BNSF's 2014 profits will still exceed last year.
The value of Berkshire Hathaway's investments and its derivative contracts often produce wide swings in the company's earnings from quarter to quarter, but that wasn't the case in the first quarter. Berkshire said its investments and derivative contracts were worth $1.17 billion at the end of March. That was up only slightly from last year's $1.11 billion estimate.
Buffett has said Berkshire's operating earnings are a better measure of how the company is performing in any given period, because those figures exclude the value of derivatives and investment gains or losses.
Berkshire reported operating earnings of $3.53 billion, or $2,149 per Class A share, in the quarter. That's down from $3.78 billion, or $2,302 per A share, last year. Berkshire owns roughly 80 subsidiaries, including clothing, furniture and jewelry firms. Its insurance and utility businesses typically account for more than half of the company's net income. It also has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
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Berkshire Hathaway Inc.: www.berkshirehathaway.com