Berkshire Hathaway posts 9% profit slump, including $678m Tesco write-down

Berkshire Hathaway, Warren Buffet’s multinational conglomerate posted a 9% slump in third-quarter profit compared to the same period last year. On Friday the company said its investment in the scandal-ridden British supermarket giant Tesco was written down by $678 million.

In the third quarter the Omaha-based holding company said it earned $6.62 billion, i.e. $2.811 per Class A share, compared to $5.05 billion ($3,074 per share) in Q3 2013.

Revenue increased by 10% to $51.2 billion.

Investing in Tesco plc was a huge mistake, Mr. Buffett had said in October during a CNBC interview. The company’s stake in the British retailer has been reduced from 5.1% in 2013 to just 3%.

Berkshire Hathaway recorded an overall $107 million loss on its investments and derivatives, compared to a $1.39 billion gain last year.

Berkshire Hathaway Q3 2014 Operating Earnings

(Source: Berkshire Hathaway)

Berkshire’s operating earnings, which Mr. Buffett says better reflect the company’s performance, were 29% higher in Q3 at $4.7 billion ($2,876 per share), compared to $3.66 billion ($2,228 per share) in Q3 2013.

The company says shareholders’ equity has risen by $15.6 billion since the beginning of the year, while its book value per Class A equivalent share has increased 7.1% to $144,542 as of September 30th, 2014.

Several of Berkshire’s businesses had a good quarter. At the end of Q3 it held $62.4 billion in cash versus $42 billion in Q3 last year.

With such an accumulation of cash, most analysts are betting on a major acquisition soon.

The company’s insurance underwriting profit jumped to $629 million in Q3 2014, compared to $170 million in the same quarter last year, while its BNSF railroad business posted net income of $1.035 billion, versus $989 million a year ago.

Berkshire’s utility unit’s net income came in at $697 million in Q3, which was boosted by the addition of NV Energy in Nevada. Net income in Q3 2013 was $472 million.

About Berkshire Hathaway

Berkshire Hathaway Inc. is headquartered in Omaha, Nebraska. It is a multinational holding company with most of its business activities occurring within the United States.

The company’s Chairman and CEO is Warren Buffett, the fourth richest person in the world.

According to Forbes Global 2000, it is the fifth-largest publicly-listed company globally.

The company employs about 300,000 workers globally.

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