Bad weather rains on Berkshire Hathaway’s first quarter parade

Profits at Berkshire Hathaway Inc (NYSE:BRK.A) slumped in the first quarter of 2017 after its insurance business was hit by higher-than-expected damages linked to catastrophes last year.

The Warren Buffett-owned conglomerate said it had been forced to shell out millions in 2016 as a result of several high-profile natural disasters, including a devastating cyclone in Australia.

Those catastrophes weighed on the group’s bottom line, which sunk to US$4.06bn, or US$2,649 per share, missing Wall Street expectations of US$4.37bn, or US$2,655 per share.

The troubles in the insurance arm masked some decent gains elsewhere in Berkshire’s vast portfolio of companies, including the BNSF railroad, where profits climbed 7% year-on-year to US$838mln.

Book value and cash pile rises

Billionaire Buffett isn’t a fan of using profits as a way of assessing the performance of the company.

Instead he prefers to use the book value (assets minus liabilities) for the firm’s Class A shares as a barometer for more long-term performance. That rose 3.5% in the first three months of 2017 to US$178,073.

Cash and cash equivalents on the group’s balance sheet rose to a record US$96.5bn, with analysts estimating that Berkshire has more than US$70mln in cash that it could spend immediately.

Shares in Berkshire – which is valued at more than US$400bn – opened 1% lower on Monday at US$247,560.

Story by ProactiveInvestors