Berkshire Hathaway profit rises 62%

BERKSHIRE Hathaway, the insurance and investment firm run by billionaire Warren Buffett, has said second-quarter profit rose 62% as investments benefited from higher US interest rates and a weakening dollar.

Net income climbed to $2.35 billion (€1.7bn), or $1,522 share, from $1.45bn, or $941, a year earlier, the Omaha, Nebraska-based company said. Interest and dividend income from investing policyholder premiums rose 34% to $782 million, and the company had an $87m gain on its foreign currency position after a loss a year earlier.

Berkshire cut its currency contracts by $4.2bn during the quarter to $1.2bn even as the US Dollar Index, used to measure its value against six major currencies, fell the most in 18 months.

Mr Buffett, who had as much as $21.8bn in contracts in 2005, told investors in March he would acquire interests in companies outside the US instead.

Proceeds from selling securities contributed the remainder of $294m in gains in the quarter. Profit before the gains was $2.1bn, or $1,332 a share.

Profit from underwriting the policies fell 1.3% to $371m, higher than Gates’ $305m estimate, as a decline at auto insurer Geico Corp countered gains at reinsurer General Re Corp, which benefited from fewer catastrophe losses outside the US.

During the quarter, profit from non-insurance businesses rose 37% to $927m. Earnings from the company’s power and gas utility businesses rose 58% to $158m, reflecting the $5.1bn acquisition of Portland, Oregon-based PacifiCorp from Scottish Power in March.

Berkshire’s manufacturing, services and retailing group posted a 23% profit increase to $554m on gains at NetJets, an operator of private jets, and Shaw Industries, a maker of flooring.

Mr Buffett transformed a failing textile manufacturer into a holding company with a value $141bn.