Apple stake helps Buffett post bumper $12bn profits

Warren Buffett chairman cools off at the Berkshire Hathaway shareholders meeting. The fund’s shares in Apple are worth $50 billion

Warren Buffett chairman cools off at the Berkshire Hathaway shareholders meeting. The fund’s shares in Apple are worth $50 billion

Operating earnings, which exclude some investment results, rose to $6.9 billion from $4.12 billion in the year prior.

The firm owns around a five per cent stake in the company, and in May, Buffett said he had so much confidence in the stock that he would purchase "100 per cent" of its shares if he could.

Earnings were up across a number of subsidiaries, including auto insurance company Geico, vehicle dealership group Berkshire Hathaway Automotive and rail freight firm BNSF.

Net income, meanwhile, almost tripled, though that reflected a new accounting rule requiring Berkshire to report unrealized gains on its stock investments with earnings.

Buffett wrote in his annual letter to shareholders in February that the rule change would "severely distort" its net earnings, and cautioned investors to focus on the "truly important numbers that describe our operating performance".

Analysts surveyed by FactSet expected operating earnings of $2.27.

Its railroad, utilities and energy business also made $1.9bn from $1.5bn previous year.

Berkshire is based in Omaha, Nebraska, and has more than 90 businesses in the insurance, chemicals, energy, food and retail, industrial parts, railroad and other sectors.

Book value per Class A share, reflecting assets minus liabilities and a preferred measure of growth for Buffett, rose 3 percent in the quarter to $217,677.

RBS to pay its first dividend since 2008 bailout
RBS has not paid a dividend since 2008 during the financial crisis when it was bailed out with £45mln of taxpayer money. The dividend is worth £240 million and the Treasury will receive £149 million because of the UK Government's stake.

The policy change reflected Buffett's struggles to find big acquisitions for Berkshire. In mid-July, the firm made an internal rule change that essentially granted Buffett and Berkshire Vice Chairman Charlie Munger the ability to repurchase company stock whenever they feel like it. Berkshire Hathaway's holding in the iPhone-maker was worth $47.2bn at the end of June, up from $28.2bn at the turn of the year.

Berkshire spent $6.08 billion on equities in the quarter.

Insurance underwriting profit totalled $943m, compared with a year earlier $22m loss.

Geico's pre-tax underwriting profit rose to $US673 million from $US119 million, after it boosted rates in response to rising accident and storm losses a year ago.

Berkshire A class shares are up 2% this year and closed on Friday at $US304,671.

Underwriting gains from Berkshire's main reinsurance group rose eightfold from a year earlier, when a cyclone in Australia cut into profit.

BNSF profit surged 37% to $1.31bn, as economic growth led to more shipments of consumer goods, and demand for fertiliser, grain, petroleum products, plastics, sand and steel.

Profit from manufacturing, services and retailing units rose 29 percent, reflecting demand at Precision Castparts, Berkshire Hathaway Automotive and the German motorcycle accessories unit Detlev Louis Motorrad.

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