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BUSINESSMonday 10 August 2015
Buffett’s company reports 37 percent drop in 2Q earnings
JOSH FUNK Class A share. That’s down reported per share profit of quarter, compared to last come in the third quar-
AP Business Writer from last year’s $6.4 billion, $2,367, down from $2,634. year’s $2.06 billion. A year ter,” Kilpatrick said. Berk-
OMAHA, Neb. (AP) — War- or $3,889 per share. Those Buffett recommends inves- ago, Berkshire traded most shire’s insurance compa-
ren Buffett’s Berkshire Ha- results were helped by a tors pay more attention to of its Graham Holdings nies, which include Geico
thaway reported a 37 per- $1.1 billion paper gain on a Berkshire’s quarterly oper- stock for Miami-based tele- and General Reinsurance,
vision station WPLG, some reported a $38 million un-
Berkshire Hathaway Chairman and CEO Warren Buffett speaks in Omaha, Neb. Berkshire Hatha- Berkshire stock and cash. derwriting loss compared
way reported poor quarterly financial results over the weekend. Berkshire officials do not to last year’s $411 million
typically comment on their gain. The negative swing
(AP Photo/Nati Harnik) quarterly earnings reports, was driven by higher claims
and they did not immedi- at Geico and $115 million in
cent drop in its second- stock exchange deal. ating earnings because ately respond to an inter- storm losses in Australia that
quarter profit as the paper Revenue grew 3 percent to they exclude the swings in view request this weekend. Berkshire insured.
value of its investments fell $51.4 billion. The four ana- the value of investments Berkshire’s latest major deal Berkshire said Geico cus-
and its insurance compa- lysts surveyed by FactSet and derivatives, which can that created the Kraft Heinz tomers may see rate in-
nies reported an under- expected Berkshire to re- vary greatly from quarter Food Co. closed just after creases as a result of the in-
writing loss. Berkshire Ha- port operating earnings per to quarter. Berkshire’s in- the second quarter ended, crease in claims. The insur-
thaway’s net income fell to Class A share of $2,997.14. vestments and derivatives so it’s not reflected in these ance results were especial-
$4.01 billion, or $2,442 per By that measure Berkshire added $123 million this results. But Berkshire said it ly disappointing because
expects to record a $7 bil- that is one of Berkshire’s
lion gain on the Kraft deal core business groups, said
in the third quarter. Edward Jones analyst Jim
Berkshire teamed up with Shanahan. And reinsur-
the Brazilian investment ance rates are unlikely to
firm 3G Capital to acquire improve soon because
Kraft through their ketchup competition has increased
maker H.J. Heinz. The deal significantly. But investors
created one of the world’s may give Berkshire the
largest food companies benefit of the doubt if they
with annual revenue of focus on positive areas of
about $28 billion. Berkshire the report, like the Kraft
owns 27 percent of the deal and subsidiaries that
new Kraft Heinz. performed well, Shanahan
Andy Kilpatrick, who wrote said. Berkshire’s BNSF rail-
“Of Permanent Value: road generated $963 mil-
The Story of Warren Buf- lion net income, up from
fett,” said the Kraft deal $916 a year ago, despite
will make up for the rough relatively flat volume and
second-quarter results. weaker demand for coal
“That’s the real positive and crude oil shipments be-
of the year, and that will cause service improved.q
Texas-Amazon sales tax deal benefited both sides, data shows
AUSTIN, Texas (AP) — Three added hundreds of mil- expand their physical pres- The spat began in Septem- fellow with Washington,
years on, a much-watched lions of dollars to state cof- ence in the state, which ber 2010, when Combs or- D.C.-based Center on Bud-
deal to settle a sales tax fers. Meanwhile, Amazon was largely beneficial to dered the company to pay get and Policy Priorities,
collection dispute between told state officials this sum- the economy.” $269 million for uncollected called the Texas-Amazon
Texas and Amazon.com mer that it had 3,500-plus The 2012 agreement, sales taxes from 2005 to agreement a national
appears to have benefited Texas employees and had reached under then- 2009. game-changer.
both sides, according to an made $300 million in capi- Comptroller Susan Combs, Amazon responded by It “completely turned the
analysis published Sunday tal investment statewide ended two-plus years of threatening to close a fa- tide nationally in terms of
by The Austin American- through the end of last year back tax battles between cility it operated in Irving, how Amazon dealt with this
Statesman. — exceeding benchmarks Texas and Amazon and eliminating 119 jobs and issue,” Mazerov said.
The agreement saw the set as part of the agree- also saw the company of- shutting Texas out of future In addition to collecting
state drop its demand that ment. fer an “immaterial pay- expansion plans. The com- sales taxes, the deal man-
the e-commerce giant pay Comptroller Glen Hegar, ment” to settle the state’s pany had long opposed dated Amazon achiev-
$269 million in back sales who wasn’t in office when complaint. collecting taxes, though ing hiring and investment
taxes in exchange for Am- the deal was struck, is Since July 2012, sales tax it had reached a previous benchmarks by the end of
azon agreeing to collect nonetheless praising it. revenue in Amazon’s sec- agreement with Nevada 2014.
state sales taxes beginning “I believe Texas benefited tor has gone up more than that delayed its sales tax In a May 7 letter to the
July 1, 2012. The Seattle- from the deal with Ama- $325 million. State law pro- collections there until 2014. comptroller’s office, Paul
based firm also got incen- zon. The agreement meant hibits the comptroller’s of- When Texas struck its Misener, Amazon’s vice
tives to create jobs and Amazon began collecting fice from releasing sales agreement with the firm, president for global pub-
make capital investments and remitting taxes to the tax collections by individ- Combs called it “the best lic policy, wrote that the
statewide. state, which the comptrol- ual companies, but since deal in the United States,” company had now “satis-
The Statesman used Texas ler’s office felt were legally Amazon is the world’s larg- because while other states fied the capital investment
comptroller’s office data to due,” Hegar said. “The est online retailer, its sales were waiting years to col- and job creation require-
show that collecting sales agreement also allowed in Texas likely constitute a lect the tax, Texas only ments as agreed to in the
taxes from Texas residents Amazon to start building significant portion of that waited 60 days. agreement signed April 24,
on Amazon purchases warehouses and to greatly increase. Michael Mazerov, senior 2012q
