Berkshire 2Q earnings rise on utility and railroad boost

Warren Buffett's Berkshire Hathaway Inc beat analysts' estimates as second-quarter profit earnings rose at its utility business and railroad.

Net income was up to $4.54 billion, or $2,763 a share, from $3.11 billion, or $1,882, a year earlier, gaining on Buffett's derivative bets, according to a filing by the Omaha, Nebraska-based company. Operating earnings, which excluded some investment results, stood at $2,384 a share.

Berkshire benefited this year with the US economy rebounding and stocks picking up, pushing up the value of Buffett's investments. The company's operating units, including railroad Burlington Northern Santa Fe (BSNF), auto insurer Geico and utility MidAmerican Energy Holdings Co, have operations mostly in the country.

Class A shares rose 0.5 per cent to $176,500 yesterday in New York prior to the results, as they advanced 32 per cent this year. That compared against the 20 per cent increase in the Standard & Poor's 500 Index.

Net income from BNSF rose 10 per cent to $884 million with increased revenue of about 5 per cent to $5.32 billion, on increases in industrial and consumer products and coal.

According to the railroad's expectations capital commitments this year would be $4.3 billion, or $200 million more than previously disclosed, BNSF said in a separate filing.

Buffett, who would turn 83 later this month, has run the Omaha, Nebraska-based Berkshire since 1965, and favours businesses that have consistent earnings power.

He spent $12.3 billion on part acquisition of HJ Heinz Co, the maker of ketchup and Ore-Ida potato products. The world's fourth-richest person had told shareholders last month that while looking for acquisitions, "we're going to find most of our opportunities in the United States."

Quarterly net income for Berkshire was up at $4.54 billion, or $2,763 per Class A share, from $3.11 billion, or $1,882 per share, a year earlier.

Operating profit increased 5 per cent to $3.92 billion, or $2,384 per Class A share, from $3.72 billion, or $2,252 per share.

Revenue was up 16 per cent from a year ago to $44.69 billion. Book value per Class A share, Buffett's preferred measure of growth, saw a 2 per cent rise from the end of March to $122,900.

Rising prices and higher customer loads helped drive a 10 per cent increase in profit from its MidAmerican Energy utilities and energy unit to $279 million.

Also pretax underwriting gains more than doubled at the Geico car insurance unit to $336 million, with premiums earned growing 11 per cent as underwriting expenses fell.