(Adds comments, cash position, individual businesses' results)
By Jonathan Stempel and Luciana Lopez
Aug 1 Warren Buffett's Berkshire Hathaway Inc
on Friday said second-quarter profit soared 41
percent to a record high, reflecting substantial investment
gains and improved results in manufacturing, service and retail
"It's clear that Warren Buffett's bet on the U.S. economy is
paying off," said Michael Yoshikami, president of Destination
Wealth Management in Walnut Creek, California, and a longtime
Net income rose to $6.4 billion, or $3,889 per Class A
share, from $4.54 billion, or $2,763 per share, a year earlier.
Quarterly operating profit rose 11 percent to $4.33 billion,
or $2,634 per Class A share, from $3.92 billion, or $2,384 per
Analysts on average expected operating profit of $2,482 per
Class A share, according to Thomson Reuters I/B/E/S.
Book value per share, Buffett's preferred measure of growth,
has risen 5.6 percent this year to $142,483.
Results included $1.96 billion of investment gains.
Berkshire shed $2.86 billion of equities in the quarter,
including a swap of a 40-year investment in former Washington
Post publisher Graham Holdings Co for a Miami television
station and other assets.
Accounting rules require Omaha, Nebraska-based Berkshire to
report these sums with earnings, though Buffett considers the
amounts in any given quarter often to be meaningless.
Berkshire owns more than 80 businesses in sectors including
insurance, railroads, energy, chemicals, food and clothing.
Analysts have said the company's increasing diversification
over the years has made its fortunes more closely tied to the
overall economy. The Commerce Department reported the U.S.
economy grew at a 4 percent annual rate from April to June.
Berkshire's diversification helped in the quarter. While
profit fell 8 percent in insurance, the company's best known
business sector, earnings from other businesses grew 20 percent.
GEICO GROWS, BNSF DISAPPOINTS
Profit grew 29 percent from manufacturing, service and
retail operations, such as Berkshire's Lubrizol chemicals and
Forest River recreational vehicle units.
Pre-tax profit doubled in apparel, helped by lower
manufacturing and pension costs at Fruit of the Loom.
Profit also increased 34 percent in energy and utilities,
largely reflecting a year-end purchase of Nevada's NV Energy.
BNSF Railway's profit grew 4 percent, but Berkshire
expressed disappointment, saying, "Service levels continued to
be well below our internal standards, as well as those expected
by our customers."
Many insurance businesses also posted improved results, with
larger underwriting gains from Geico auto insurance and General
Re reinsurance, and in a business that provides commercial and
worker's compensation insurance.
The insurance results were hurt by a small underwriting loss
in a business that insures against major catastrophes, which
Berkshire attributed mainly to currency fluctuations.
"Insurance profit looked a little weak," said Meyer Shields,
managing director at Keefe, Bruyette & Woods Inc. "The rest of
the business looked pretty good, which matches the
slow-but-steady economic growth we keep hearing about."
Berkshire's cash stake surged to $55.46 billion from $48.95
billion at the end of March.
That gives Buffett ammunition to make one or more large
acquisitions, which he calls "elephants." He has said he would
partner on an acquisition, as in 2013 when Berkshire and
Brazil's 3G Capital teamed up to buy H.J. Heinz Co.
Berkshire said it owns more than $119 billion of equities
such as American Express Co, Coca-Cola Co,
International Business Machines Corp and Wells Fargo &
In Friday trading, Berkshire Class A shares closed up $1,155
at $189,279. Its Class B shares rose 40 cents to $125.83.
(Reporting by Luciana Lopez in Grand Lake Stream, Maine, and
Jonathan Stempel in New York; Editing by Jennifer Ablan and