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Burlington Northern Addition Drives 73% Profit Increase for Warren Buffett's Berkshire Hathaway

Friday, 6 Aug 2010 | 8:23 PM ET

Warren Buffett's Berkshire Hathaway reports a 72.7 percent increase in its second quarter operating earnings to $3.07 billion, with "major contributor" Burlington Northern Santa Fe adding $603 million during the period.

Berkshire's op earnings totaled $1.78 billion in last year's second quarter.

Berkshire completed its acquisition of BNSF in February, so the March to June period is the first full quarter to include the railroad's profits.

In a news release tonight, Berkshire also credits NetJets' swing from a pre-tax loss of $348.5 million in the first half of last year to a pre-tax profit of $114.5 million this year. David Sokol, seen as a leading contenderto eventually succeed Buffett as Berkshire's CEO, has been running NetJets since last August's sudden departure of founder Richard Santulli.

Operating earnings per Class A share increased 63 percent to $1,866, beating the consensus analyst forecast of $1360.

While earnings from Berkshire's operating companies are up, its net earnings are down. They fell 40.3 percent from $3.29 billion in last year's Q2 to $1.97 billion in this year's second quarter.

That's because the net earnings include unrealized "mark-to-market" paper losses on Berkshire's long-term derivatives contracts it's written insuring their buyers against a catastrophic collapse in global stock prices.

With markets suffering big drops during the period, Berkshire reports $1.41 billion in derivative losses vs. a $1.53 billion gain in last year's Q2.

Berkshire's 10-Q filingwith the SEC indicates the company's total cost basis in shares of Procter and Gamble decreased by $61 million. That's evidence Buffett continued to sell P&G shares in the second quarter, after trimming the stake by 9.6 percent in the first quarter and 9.1 percent in last year's fourth quarter.

That filing also reveals Berkshire's reinsurance business is estimating $216 million in catastrophe losses from the BP oil well explosion in the Gulf of Mexico and the Chilean earthquake.

Current Berkshire stock prices:

Class B:

Class A:

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