Warren Buffett’s Berkshire Hathaway Inc on Friday reported a 77 percent drop in third-quarter earnings, hurt by declining insurance profits and a US$1.01 billion investment loss.
Net income fell to US$1.06 billion, or US$682 per Class A share, in the quarter ending Sept. 30. That’s down sharply from profit a year ago of US$4.55 billion, or US$2,942 per share, which included a US$2 billion gain aided by the sale of PetroChina stock.
Berkshire generated US$27.9 billion in revenue during the quarter, down from US$29.9 billion a year ago.
Berkshire began the year with an unrealized US$1.67 billion loss on its derivative contracts and posted a pretax loss of US$2.21 billion on these contracts through the first nine months of the year.
But Berkshire has no plans to sell the long-term derivative contracts before they mature, and Buffett has predicted they will ultimately be profitable.
Andy Kilpatrick, stockbroker and author who wrote Of Permanent Value: The Story of Warren Buffett, said he was impressed with the results Buffett delivered, given the difficult economic environment.
“Very few people are making money,” Kilpatrick said. “He’s still making money with some extraordinary paper losses.”
Berkshire finished the third quarter with US$33.4 billion cash on hand. That is up from the end of the second quarter when the company had US$31.2 billion cash on hand.
Year to date, Berkshire’s net worth slipped to US$120.15 billion from US$120.73 billion, but price declines in investments and increased liability for equity index put option contracts last month accounted for a US$9 billion decline in net worth.
Through the first three quarters of this year, Berkshire generated a net income of US$4.88 billion, or about US$3,149 per share.
That’s down from the US$10.27 billion, or about US$6,644 per share, that Berkshire reported a year ago.
Berkshire owns more than 60 subsidiaries including insurance, clothing, furniture, candy companies, restaurants, natural gas and corporate jet firms. Berkshire also has major investments in such companies as Coca-Cola Co, Anheuser-Busch Cos. and Wells Fargo Co.
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