Berkshire Hathaway Reports Higher Revenue

Berkshire Hathaway Inc.'s third-quarter operating profit and revenue rose, driven by its businesses in manufacturing, utilities and energy.

Net income, however, declined as the Nebraska-based conglomerate recorded lower investment gains. A year ago, Berkshire benefited from a $4.4 billion gain from its Kraft Heinz investment.

The conglomerate, led by renowned investor Warren Buffett, pulls in money from a railroad, utilities, industrial manufacturers, home builders, branded-food sellers and even an auto dealership. In addition, the 86-year-old Nebraska tycoon, whose shrewd investments have earned him the nickname "the Oracle of Omaha," has turned to acquisitions as a way to drive profit.

This year, Berkshire bought aircraft-parts supplier Precision Castparts Corp., in what was its largest acquisition to date. Precision Castparts—among Berkshire's largest holdings, along with American Express Co., Coca-Cola Co., Wells Fargo & Co. and IBM Corp.—forms part of Berkshire's most profitable noninsurance businesses, the so-called Powerhouse Six.

Still, the insurance business, the engine that has fueled Berkshire's expansion, remains at the core of its moneymaking machine. Insurance brings in billions of dollars of "float," upfront premiums customers pay and that Berkshire invests for its own gain.

Insurance float rose to $91 billion in the most recent period.

Meanwhile, the operating profit of its insurance underwriting business, which includes Geico Corp., fell 34% to $272 million.

Insurance-investment income's operating profit improved to $850 million, while operating profit at the noninsurance businesses—which include the railroad, utilities and energy segments—rose 38% to $2.04 billion.

Over all, profit fell 24% to $7.2 billion, or $4,379 a Class A share, while operating profit, which excludes some investment results, rose 7% to $4.85 billion, or $2,951 a Class A share.

Revenue edged up to $59.07 billion from $58.99 billion.

Analysts surveyed by Thomson Reuters had projected operating profit of $3,058.10 a Class A share on $57.04 billion in revenue.

Berkshire reported $2.35 billion in investment gains in the third quarter, down sharply from the year-ago period but helped by an after-tax gain of roughly $1.6 billion from the sale of its crisis-era investment in Wrigley as Mars Inc. combines its chocolate and chewing gum operations into Mars Wrigley Confectionery.

Book value, Mr. Buffett's preferred yardstick for measuring net worth, rose 5.3% to $163,783 per Class A equivalent share as of Sept. 30. Last year, Berkshire reported a 3.3% increase in book value for the first nine months of the year.

Class A shares closed Friday at $214,545, up 8% this year, while Class B shares have gained another 8% to $142.95.

Berkshire created the B shares, known as "Baby Berkshires" or "Baby Bs," in 1996 to make the company's stock more accessible to investors.

Write to Maria Armental at [e-mail]

(END) Dow Jones Newswires

November 04, 2016 17:15 ET (21:15 GMT)

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