Warren Bufett’s Berkshire Hathaway 2Q Profit Up 25 Percent

Berkshire Hathaway CEO Warren Buffett
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Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), the multinational conglomerate controlled by billionaire Warren Buffett, reported a 25% increase in profit for the second quarter of 2016.

The conglomerate’s its newly-acquired manufacturing businesses and insurance were the primary contributors to its strong financial results during the period.

Buffett

Berkshire Hathaway’s Class A stock climbed 1.48% to $218,010.00 per share while its Class B stock increased 1.77% to $146.65 per share on Friday.

Berkshire Hathaway second-quarter results

During the second quarter, Berkshire Hathaway generated net income of $5 billion, up from $4.01 billion in the year-ago quarter.  Its operating earnings per Class A equivalent share were $2,803, up from $2,367.

According to the conglomerate, its operating earnings from its insurance underwritings were $337 million compared with an operating loss of $38 million in the same quarter last year.  Its investment income was slightly climbed to $978 million.

Berkshire Hathaway’s operating earnings from railroad, utilities and energy dropped from $1.47 billion to $1.25 billion, other businesses increased from $1.68 billion to $1.89 billion. The conglomerate also generated $149 million in operating earnings from a category reported as other.  Its total operating earnings was $4.61 billion, up from $3.89 billion in second-quarter a year ago.

The conglomerate’s book value per Class A share rose 2.9% to $160,009. Its insurance float (net liabilities assumed under insurance contracts) was around $90 billion as June 30, 2016.

In a regulatory filing, Berkshire Hathaway reported that its income from its manufacturing, service and retailing segment was $1.49 billion, an increase of 14% driven by Precision Castparts Corp (PCC) and Duracell. The conglomerate completed its acquisition of PCC and Duracell in January and February this year, respectively.

Berkshire Hathaway in good position to make another big acquisition

The conglomerate ended the second-quarter with $72.7 billion in cash and cash equivalents compared with $66.59 billion in the year-ago quarter.

Bloomberg quoted Edward Jones analysts Jim Shanahan’s comment on Berkshire Hathaway that it is “generating a lot of cash” and it is in “really good position to make another large acquisition.”

On the other hand, Cathy Seifert, an equity analyst at S&P Global Market Intelligence, noted, “It’s an insurance-based conglomerate and the insurance underwriting turned around at a time when a lot of the peer group saw deterioration.”

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