Berkshire Hathaway (BRK) 4Q Profit Increases 32 Percent

Berkshire Hathaway

Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B), the conglomerate headed by Warren Buffett, reported a 32% increase in profit for the fourth quarter of 2015.

According to Berkshire Hathaway, its fourth-quarter net income increased to $5.48 billion or $3,333 per Class A share from $4.16 billion or $2,529 per Class A share in the same period a year ago.

The conglomerate said its operating earnings excluding investment and derivative gains/losses were $4.67 billion. Its operating earnings per Class A share were $2,843 compared with $2,412 in the same period a year earlier.

Berkshire Hathaway book value rose 6.4%

For the full-year 2015, Berkshire Hathaway generated net income of $24.08 billion or $14,656 per Class A share, up from $18.87 billion or $12,092 per Class A share in 2014.

Its operating earnings climbed from $16.55 billion or$10,071 per Class A share to $17.35 billion or $10,564 per Class A share.

Berkshire Hathaway’s book value increased 6.4% to $155,501 per Class A share as of December 3, 2015.  Its insurance float was approximately $88 billion by the end of the year.

Berkshire Hathaway Powerhouse Five

In a letter to shareholders, Buffett said the most important development at Berkshire Hathaway last year was the dramatic improvement of BNSF railroad’s service to customers. According to him, the conglomerate invested $5.8 billion in capital expenditures to achieve such result.

Buffett said BNSF maintained its volume and generated a record pre-tax net income of $6.8 billion last year, up by $606 million from 2014.  According to him, BNSF is the largest among the conglomerate’s “Powerhouse Five” including Berkshire Hathaway Energy, Marmon, Lubrizol and IMC.

Berkshire Hathaway’s Powerhouse Five generated a combined profit of $13.1 billion in 2015, an increase of $650 million in 2014. The five companies are the most profitable non-insurance businesses of the conglomerate.

Buffett said the Berkshire Hathaway will have “Powerhouse Six” this year with the inclusion of Precision Castparts, which the conglomerate acquired for more than $32 billion in cash.

“Charlie Munger, Berkshire Vice Chairman and my partner, and I expect Berkshire’s normalized earning power to increase every year. (Actual year-to-year earnings, of course, will sometimes decline because of weakness in the U.S. economy or, possibly, because of insurance mega-catastrophes.) In some years the normalized gains will be small; at other times they will be material. Last year was a good one,” wrote Buffett.