OMAHA, Neb. — Berkshire Hathaway Inc. said Saturday that its fourth quarter profit slid 17 percent because of declines in the paper value of its investments and derivative contracts.
Berkshire’s quarterly profit declined to $4.16 billion, or $2,529 per Class A share, on $48.3 billion in revenue. That’s down from $4.99 billion, or $3.035 per share, on $47 billion in revenue.
The biggest factor was investment and derivative gains of $192 million this quarter compared to $1.2 billion in 2013.
Chairman and CEO Warren Buffett has said that Berkshire’s operating earnings, which exclude investments and derivatives, are a better measure of its performance. Those were $3.96 billion, or $2,412 per share, which is up from $3.78 billion, or $2,297 per share.
The four analysts surveyed by FactSet expected operating earnings of $2,655.09 per share, on average.
“I thought it was a good year, but not a great year,” said Andy Kilpatrick, a retired stockbroker who wrote the book, “Of Permanent Value: The Story of Warren Buffett.”
Most of Berkshire’s 80-odd subsidiaries performed well last year with its utility and manufacturing businesses posting the biggest gains.
Berkshire Hathaway Energy added $1.88 billion net income in 2014 after it acquired Nevada utility NV Energy, up from $1.47 billion in 2013.
Berkshire’s manufacturing, service and retail businesses added $4.5 billion to the conglomerate’s profits, up from $3.9 billion. Specialty chemical manufacturer Lubrizol and toolmaker Iscar both had strong years.
BNSF railroad struggled with service problems last year as a strong grain harvest combined with the surge in crude oil shipments clogged rail lines just as extreme cold weather took hold. BNSF still contributed nearly $3.9 billion to Berkshire’s earnings, up from $3.8 billion in 2013.
Buffett’s preferred measure of Berkshire’s performance is growth in book value — its assets minus liabilities. Berkshire’s book value gained 8.3 percent in 2014, but trailed the S&P 500’s 13.7 percent gain. Berkshire underperformed that benchmark in five of the last six years and 11 out of the past 50 years.
Berkshire Hathaway Inc. owns roughly 80 subsidiaries, including insurance, utility, railroad, furniture and jewelry firms. The company also has major investments in Coca-Cola Co., IBM and Wells Fargo &Co.
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