Berkshire Hathaway's Earnings Rise 89%

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Berkshire Hathaway's Earnings Rise 89%
Omaha, NE, May 12--Berkshire Hathaway Inc. reported an 89% surge in first-quarter net income. The conglomerate run by billionaire Warren Buffett posted net income of $1.73 billion, or $1,127 a share, compared with $916 million, or $598 a share, a year earlier. Net income included realized investment gains of $518 million in the latest quarter and $98 million a year ago. Excluding these gains, earnings came to $ 1.21 billion, compared with $818 million a year earlier. Revenue jumped 20% to $11.4 billion from $9.52 billion. Berkshire and its subsidiaries engage in a number of diverse business activities among which the most important is the property-and-casualty insurance business conducted on both a direct and reinsurance basis. On Saturday, Buffet, Berkshire's chairman and chief executive, told shareholders the company would have first-quarter operating earnings of about $ 1.7 billion, which he described as "the best operating earnings we've ever had." Buffett also told the overflow crowd at the Omaha Civic Auditorium that Berkshire had accumulated investable cash -- or "float" as he calls it -- of $42.5 billion, up from about $37 billion a year ago. The company excelled largely as a result of its well-known insurance operations, which have rebounded well in the last few years and continue to be the company's mainstay. The segment had earnings before taxes of $1.14 billion, versus $736 million a year ago, thanks to a turnaround at its reinsurance business. Revenue rose 17% to $6.03 billion from $5.16 billion. Reinsurance benefited from few large property losses, higher rates and better coverage terms. But it wasn't all good news. Buffett said Saturday that Berkshire's NetJets unit was losing money, especially in Europe, and being hurt by a soft market for used planes that has caused it to take write-downs. But he said the unit, which offers fractional ownership of aircraft, is gaining market share and in the event that the industry undergoes a shakedown "I can assure you we will not be one of the shook." Berkshire reported that NetJets' revenue fell 19% in the first quarter. The overall flight-services segment had an $8 million loss before taxes, compared with year-earlier earnings of $30 million. Revenue fell 16% to $548 million from $655 million.


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