Berkshire Q2 net falls 40 per cent on derivative losses

Warren Buffett's Berkshire Hathway has reported a 40-per cent fall in its second-quarter net profit at $1.97 billion ($1,195 per Class A share) against a net income of $3.3 billion ($2.12 per Class A share) in the same period of the previous year.

Berkshire Hathaway said the fall in profit was due mainly to falling stock prices that depressed the value of its derivatives contracts.

Berkshire reported a $1.41 billion losses on derivatives during the quarter, against a $1.53 billion profit in the year earlier quarter. This pushed the book value per Class A share down 3 per cent to $86.661 as of 30 June 2010 from $89.374 on 31 March 2010.

Operating earnings for the second quarter and first six months of 2010, however, increased 72.7 per cent and 52.0 per cent, respectively, from the comparable periods in 2009.

Excluding investments, operating profit surged to $3.07 billion ($1.866 per share) from $1.78 billion ($1.147 per share).

Burlington Northern Santa Fe Corp (BNSF) was the major contributor adding $885 million, including $603 million, during the second quarter to Berkshire's net earnings.