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Berkshire's Q1 profit set to fall

WARREN Buffett says his holding company, Berkshire Hathaway Inc, will report a roughly 10 percent drop in its first-quarter operating profit this week.

Buffett offered a glimpse of Berkshire's first-quarter earnings during the company's shareholders' meeting on Saturday. But the full details, including Berkshire's net income, won't be available until Friday when the company releases its earnings report.

Berkshire owns more than 60 subsidiaries including insurance, clothing, furniture, and candy companies, restaurants, natural gas and corporate jet firms. Berkshire also has major investments in such companies as Coca-Cola Co and Wells Fargo & Co.

Buffett says Berkshire will report an operating profit of about US$1.7 billion in the first quarter. That's down from the US$1.9 billion in operating profit Berkshire reported in the same period a year ago.

Operating profit does not include gains and losses on Berkshire's investments and derivatives, which have had a significant impact on the Omaha-based company's reported profits in recent quarters.

In 2008, Berkshire recorded a largely unrealized US$7.5 billion loss on derivatives and investments that dragged down profit. Berkshire still reported a 2008 profit of US$4.99 billion, or US$3,224 per Class A share, but that was down 62 percent from the previous year.

Berkshire's fourth-quarter results were worse. Buffett's company reported net income of US$117 million, or US$76 per share, down 96 percent from US$2.95 billion, or US$1,904 per share, in the same period a year earlier.

Buffett said that in the first quarter, Berkshire's utility and insurance businesses performed fairly well during the quarter. He said profit from insurance underwriting should increase slightly because it's not tied to the recession.

But many of Berkshire's other businesses, such as its jewelry stores, Shaw carpet, Acme Brick and Clayton Homes, have been hurt.


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