Berkshire operating profit falls short, book value rises

Warren Buffett's Berkshire Hathaway Inc on Friday confirmed that its first-quarter profit rose 8 percent, while operating results fell short of analyst forecasts as its BNSF railroad unit was hurt by falling oil prices and coal demand.

The conglomerate, which operates roughly 90 businesses, nonetheless said its book value per share, measuring assets minus liabilities and Buffett's preferred gauge of growth, rose 1.2 percent from year end.

Net income for Berkshire rose to $5.59 billion, or $3,401 per Class A share, from $5.16 billion, or $3,143 per share.

Operating profit fell 12 percent to $3.74 billion, or $2,274 per Class A share, from $4.24 billion, or $2,583 per share.

Analysts on average had expected operating profit of about $2,759 per share, according to Thomson Reuters I/B/E/S, before Berkshire released preliminary results at its annual meeting in Omaha, Nebraska, on April 30.

Results suffered as falling oil prices and lower demand for coal contributed to a 25 percent drop in profit at BNSF to $784 million, as overall volume fell 5.5 percent. Freight revenue from industrial products such as petroleum fell 18 percent, and from coal tumbled 39 percent.

Railroad carloadings industry-wide fell "significantly" in the first quarter, and "almost certainly will continue to be down the balance of the year," Buffett said at the meeting.

Buffett also said results suffered as hailstorms in Texas forced Berkshire to pay more on insurance claims.

Profit from insurance underwriting fell 56 percent to $213 million despite improvement at the Geico auto insurer, which boosted premium rates to offset rising accident claims.

Book value per share rose to $157,369 per Class A share as of March 31 from $155,501 three months earlier, while revenue rose 8 percent from a year earlier to $52.4 billion.

Berkshire made two big acquisitions in the quarter.

It acquired airplane parts maker Precision Castparts for about $32.1 billion, and acquired battery maker Duracell from Procter & Gamble Co in exchange for that company's stock. The swap resulted in a $1.9 billion after-tax gain.

In Friday trading, Berkshire Class A shares closed up 0.5 percent at $216,999.99, and its Class B shares closed up 0.5 percent at $144.62, according to Reuters data. — Reuters