Berkshire Hathaway Inc. (BRK.A) Registers Lower Profit Margins For Third Quarter 2014

Berkshire Hathaway Inc. (NYSE:BRK.A) registered lower profit margins for its third quarter 2014 primarily because of an investment loss. Despite of the dropping profit margins, overall operations results surpassed the market expectations.

Some major units of the company performed well to make up for the profit drop including the railroad operations, energy, and insurance sector. Berkshire Hathaway Inc. (NYSE:BRK.A) reported net earnings of $4.62 billion or $2811 per class A share for the third quarter as compared to the net earnings of $5.05 billion or $3,074 per share reported during the third quarter of previous year. On the contrary, the operating earnings increased to $4.72 billion in this quarter as compared to the operating earnings of $3.6 billion in the same quarter last year.

The company reported loss on its investments and derivatives section primarily because of the loss in Tesco PLC (LON:TSCO) considering the $678 million write off from Berkshire. Warren Buffet is personally lowering down stakes in the British company. Net loss on investments for the quarter was $107 million against profit of $1.39 billion in the year ago quarter.

Berkshire Hathaway Inc. (BRK.A)

The railroad division of Berkshire Hathaway Inc. (NYSE:BRK.A), Burlington Northern Santa Fe Corp registered an increase in its revenue as well as profit margins. Its revenue for the quarter was $5.9 billion along with earnings of $1.6 billion. It was responsible for 11% of the net revenue of Berkshire Hathaway Inc. (NYSE:BRK.A) and 22% of its overall profit during this quarter. At the same time, the insurance division of the company reported underwriting profit of $629 million during this quarter.

However, despite of the marginal decrease in its profit, the investors are satisfied with the results. Bill Smead, Smead Capital Management chief investment officer, said,

“The things they don’t control like when they take gains worked against them. The things they do control, like insurance premiums, exploded.”

This article has been written by Prakash Pandey.

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