Berkshire's 1st-quarter profit down 3.8 percent

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Posted: Friday, May 2, 2014 12:00 am | Updated: 1:52 am, Tue May 20, 2014.

Berkshire Hathaway Inc. said Friday that first-quarter profits fell 3.8 percent, and the conglomerate led by Warren Buffett disclosed in filings Thursday the $2.9 billion purchase of a Canadian electricity transmission company.

The Omaha-based company said net income was $4.7 billion, or $2,862 a share, down from $4.89 billion, or $2,977 a share, a year earlier. Revenue rose 3.6 percent to $45.4 billion.

Operating earnings, which strip out some investing gains and losses, fell 6.5 percent to $3.5 billion.

The lower results from a year earlier were partially attributable to lower pre-tax earnings in insurance underwriting, led by an 81 percent drop at Berkshire Hathaway Reinsurance, which covers catastrophic risks. Pretax underwriting earnings at Berkshire Hathaway Reinsurance fell to $183 million, from $974 million, a year earlier.

Overall, pretax insurance earnings, investment gains included, fell 30 percent to $1.66 billion.

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Pretax gains from underwriting at Geico rose 33 percent to $353 million.

Berkshire's operations encompass dozens of businesses employing more than 300,000 people.

The newest is AltaLink, operator of 280 electric substations and about 7,500 miles of transmission lines in Alberta, Canada, where it owns half the grid and serves 85 percent of the population. Net income last year at AltaLink, bought from Canadian engineering and construction firm SNC-Lavalin, was about $147 million in U.S. dollars.

Berkshire's investment and derivatives income rose 5.6 percent, on about $1 billion of investment gains, more than triple from a year earlier. Results from derivatives alone, whose value is derived from the performance of an underlying instrument such as interest rates, fell 80 percent to $153 million.

Pretax earnings in the major categories were: $1 billion at manufacturing businesses, up 13 percent from a year earlier; $946 million from investing cash held by insurers such as Geico, a 5 percent decrease; $1.1 billion at BNSF Railway, a drop of 9 percent; and $619 million at Berkshire's energy holding company, an increase of 12 percent.

Cash on hand fell 0.3 percent to $48.9 billion.

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