Buffett’s Berkshire suffers first loss since 2001

NEW YORK, May 9 — Warren Buffett's Berkshire Hathaway posted its first quarterly loss since 2001, hurt by losses on derivative contracts and a big investment in the oil company ConocoPhillips.

The net loss for the Omaha, Nebraska-based insurance and investment company was US$1.53 billion (RM5.2 billion), or US$990 per Class A share, and compared with a profit of US$940 million, or US$607, a year earlier.

Excluding investments, operating profit fell 12 per cent to US$1.71 billion, or US$1,100 per share, from US$1.93 billion, or US$1,247. That profit was in line with the US$1.7 billion that Buffett estimated at Berkshire's annual meeting last Saturday.

Analysts on average expected operating profit of US$1,087 per share, according to Reuters Estimates. Revenue fell 9.5 per cent to US$22.78 billion.

Results reflected US$2.01 billion of writedowns on investments, including US$1.9 billion tied to ConocoPhillips.

Buffett invested US$7.01 billion in the company's stock, but in February admitted that the decision reflected "terrible timing," coming ahead of a plunge in oil prices from their record high near US$150 a barrel. Berkshire said it sold 13.7 million shares in the first quarter and more thereafter, and is likely to sell additional shares at a loss.

Results also included US$986 million of losses from derivatives contracts, including US$675 million of payments tied to junk bond defaults as a result of several corporate bankruptcies. Berkshire said it has since made another US$450 million of payments because of other defaults.

Berkshire has disclosed hundreds of derivatives contracts designed to make money if stock indexes rise and higher-risk bonds do not default. The losses exist on paper but accounting rules require Berkshire to report them with earnings.

Berkshire's book value, or assets minus liabilities, fell to US$102.8 billion from US$109.3 billion at year end. Book value per Class A share fell 6.1 percent to US$66,248.

In yesterday trading, Berkshire's Class A shares closed up US$905 at US$95,295, while its Class B shares rose US$80 to US$3,132. — Reuters