Berkshire Hathaway said on Saturday its quarterly operating profit fell more than analysts expected, as weakness in insurance underwriting, a slowing economy and trade woes weighed on the conglomerate run by billionaire Warren Buffett.
Berkshire’s auto insurer Geico suffered a larger number of accident claims, while competition from foreign producers, lower imports and “trade policy” dampened cargo volumes for consumer and agricultural products at its BNSF railroad.
Earnings also barely budged at Berkshire’s manufacturing businesses, where U.S. tariffs hurt sales of gas turbine and pipe products at its Precision Castparts unit, and its service and retailing businesses.
Second-quarter operating profit declined 11% to $6.14 billion, or roughly $3,757 per Class A share, from $6.89 billion, or roughly $4,190 per Class A share, a year earlier.
Analysts on average expected operating profit of $3,851.28 per share, according to Refinitiv IBES.
Berkshire also said quarterly net income rose 17% to $14.07 billion, or $8,608 per Class A share, from $12.01 billion, or $7,301 per Class A share, a year earlier, reflecting higher unrealized gains on Berkshire’s investments.
A U.S. accounting rule requires Berkshire to report such gains with earnings. That rule adds volatility to Berkshire’s net results, and Buffett says it can mislead investors.
The U.S. economy’s annualized growth rate slowed to 2.1% in the second quarter from 3.1% in the first quarter, as an acceleration in consumer spending was partially offset by declining exports, manufacturing and business investment, reflecting the trade war between the United States and China.
Buffett told CNBC in May that a U.S.-China trade war would be “bad for the whole world,” and a full-scale trade war would be “bad for everything Berkshire owns.”