Profit at billionaire CEO Warren Buffett's Berkshire Hathaway (BRK.A) fell 24% in the three months through September, as investment income fell and revenue from writing insurance policies declined.
The Omaha, Neb.-based conglomerate's net income was $7.2 billion, or $4,379 a share, topping the average estimate of $3,058 a share in a Bloomberg survey. Total revenue of $59 billion compared with estimates of $57 billion.
Underwriting profit at Berkshire's insurance businesses dropped 34%, due to higher expenses in the Geico auto business and a loss of $19 million in the Berkshire Hathaway Reinsurance Group, and revenue at Burlington Northern railroad declined.
"Berkshire is a microcosm of the broader economy," Cathy Seifert, an analyst with CFRA Research, said in a phone interview. "As the broader economy's growth has slowed, so too has Berkshire."
Profits in insurance, Berkshire's largest business, "were disappointing and even a little weaker than some peers," Seifert said, but the conglomerate benefited from stabilization in energy and utilities.
Third-quarter operating income, which doesn't include gains on investments and derivatives, was $4.9 billion, up 7% from a year ago.
Profit at Burlington Northern, the railroad Buffett purchased after the financial crisis that spans 28 states and nearly 33,000 miles, dropped 12% to $1 billion. Revenue from freight shipments declined 3.4% to $1.7 billion, and demand to ship petroleum products fell amid lower oil prices.
Income in manufacturing rose 32% to $12.1 billion, benefiting from the purchases of aerospace equipment-maker Precision Castparts and battery manufacturer Duracell earlier this year. Berkshire paid $32.7 billion for Precision Castparts, its largest purchase.