LOS ANGELES - Berkshire Hathaway Inc. of Warren Buffett, said Friday that its profit in the first quarter fell 58 percent of the year last due to losses of insurance of major disasters in the Japan, the New Zealand and the Australia.
The sharp drop is consistent with the preliminary results set out by Buffett in annual of the shareholders of the company based in Omaha, Nebraska meeting last Saturday.
Berkshire reported a net income of 1.5 billion dollars, or $917 per share of class A, for the quarter ended March 31. It is towards the bottom of the net income of 3.6 billion dollars, or $2,272 by A class action, a year ago.
Revenues increased to 33.7 billion, up to $ 32 billion last year.
The biggest drag on the Berkshire quarter was $ 1.7 billion in losses related to the 11 March earthquake and the tsunami in the Japan, on February 22 New Zealand earthquake, and the cyclones and floods in Australia, among other disasters.
"We had probably a quarter second-worst in terms of disaster insurance industry around the world" Buffett told shareholders.
In view of the magnitude of the losses of insurance disaster in the first quarter, and the potential for further losses by the hurricanes to the United States between June and December, Berkshire said it is unlikely that its combined insurance operations will achieve an underwriting profit this year.
Business of reinsurance as of Berkshire General Re and National Indemnity, sell backup insurance to primary insurers so that industry can cover the big losses.
The 1.7 billion in losses is an estimate of insurance claims and reinsurance of Berkshire to be established and paid over time, although this figure could change, said the company.
Berkshire reported a 821 million underwriting loss for the quarter, due to the disaster. That compares with a 226 million underwriting gain in the first quarter of last year.
Still, business insurance comprehensive company, which include auto and insurer Geico home, contributed 131 million of net income of Berkshire in the first quarter, due to investment earnings. It is considerably less than a year ago, when they added and 1.2 billion of net income.
Berkshire has approximately 80 subsidiaries, including businesses of clothing, furniture and jewellery. Its utility and insurance companies are generally more than half the net income of the company. He also has major investments in companies such as Coca-Cola Co. and Wells Fargo & Co.
Results of the company were stimulated by a strong performance of Burlington Northern Santa Fe railroad, which the company acquired a year ago.
The segment of railway contributed 607 million of net income, up from 282 million dollars a year earlier, even if the results of the previous year did not cover the whole quarter.
For the segment, revenues increased by 17% respectively billion, reflecting higher average revenue per car. Increase in fuel prices has contributed to the increase in fuel supplements larger, the company said.
Berkshire, service and manufacturing segment of the retail sale generated a revenue of 558 million, up to $ 477 million a year earlier.
Most of the improvement in this sector came from manufacturing companies such as the construction of products maker Acme Building Brands and Benjamin Moore, clothing for companies like Fruit of the Loom, and manufacturers of leisure such as forest River and Iscar metalworking Cos.
Berkshire has noted that many of its manufacturers have been hit by higher costs of the products of certain raw materials, including cotton, steel and petrochemicals, as well as higher energy costs.
As a result, companies travelled prices in recent months for some products - something that will likely be necessary if fresh remain high or more, the company said.
Public services and the energy division, which includes the Weather, the Berkshire energy added of $ 301 million to net income of Berkshire in the quarter, up to 223 million dollars last year.
Elsewhere on its balance sheet, Berkshire has recorded a loss of paper of 82 million dollars on its derivative contracts and investments. Last year, Berkshire posted a gain of $ 1.4 billion.
The real value of the derivatives will not clear at least several years, because they grow up to at least a decade now average. But Berkshire is required to estimate their value whenever the company declares a profit. Buffett told investors he believes that the contracts will be ultimately profitable because the premiums are invested.
Frameworks Berkshire say that income of the business are a better measure of how the company has during a period of time because these figures exclude its derivatives and investment gains or losses.
Operating profit of the company fell to 1.6 billion for the quarter, $ 2.2 billion a year ago.
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