 "Berkshire profit surges to record $9.43 billion")
Warren Buffett's Berkshire Hathaway Inc said third-quarter profit doubled on a one-time investment gain in Kraft Heinz Co.
Net income climbed to a record $9.43 billion, or $5,737 a share, from $4.62 billion, or $2,811, a year earlier, the Omaha, Nebraska-based company said. Operating earnings, which exclude some investment results, were $2,769 a share, beating the $2,721 average estimate of three analysts surveyed by Bloomberg.
The results show how lucrative Berkshire's relationship has been with 3G Capital. Buffett, 85, teamed with the investment firm in 2013 to buy ketchup maker HJ Heinz and embarked on an aggressive cost-cutting drive to boost margins. Then, in March, they engineered Heinz's purchase of Kraft Foods Group Inc, creating the third-biggest food and beverage company in North America and a $4.4 billion windfall for Berkshire.
"It shows shrewd investing on his part," James Armstrong, who oversees about $550 million including shares of Berkshire as president of Henry H Armstrong Associates, said before the earnings announcement. "The old guy still has some smarts upstairs." Book value, a measure of assets minus liabilities, rose almost 1 percent from June 30 to $151,083 a share.
The bet on Kraft Heinz overshadowed some of the challenges Buffett has faced this year in his stock portfolio. A few of his largest holdings -including American Express C. and International Business Machines Corp - have tumbled since December 31.
Berkshire said in a regulatory filing that unrealised losses on IBM widened to $2 billion as of September 30, or about 15 per cent of what Buffett paid. The billionaire stuck by the investment, saying he has no plan to exit the stake and expects shares to recover. "He's put a lot of capital to work in these two investments and they've underperformed," Jim Shanahan, an analyst at Edward Jones & Co, said in a phone interview of IBM and AmEx. "You have to wonder if he held onto these investments too long."
Berkshire's own shares have slumped 10 per cent this year, lagging behind the 2 per cent gain for the Standard & Poor's 500 Index. The last time Buffett fell short of the benchmark, including dividends, for a full year was 2011.
