Warren Buffett's Berkshire Hathaway Inc on Friday reported its largest quarterly profit since 2007, helped by an improving economy, investment and derivative gains, and the takeover of Burlington Northern Santa Fe Corp.

First-quarter net income was $3.63 billion, or $2,272 per Class A share, compared with a loss of $1.53 billion, or $990, a year earlier. That loss was Berkshire's first since 2001.

Excluding investments, operating profit rose 30 percent to $2.22 billion, or $1,390 per share, from $1.71 billion, or $1,100. Revenue rose 41 percent to $32.04 billion.

The quarter was Berkshire's fourth straight with a profit, and its most profitable quarter since it earned $4.55 billion in the third quarter of 2007.

Book value per Class A share, Buffett's preferred measure for performance, rose 5.8 percent from year end to $89,374.

Results included $282 million of profit from Burlington Northern in the seven weeks that Berkshire owned all of the second-largest U.S. railroad company.

It also included a $57 million pre-tax profit at NetJets Inc, a long-ailing plane leasing unit, compared with a $96 million year-earlier loss.

Insurance operations, Berkshire's biggest business, saw profit fall 4 percent to $1.21 billion because of lower investment income.

SOLD SOME PROCTER & GAMBLE SHARES

Berkshire paid $26.5 billion for the 77.5 percent it did not already own of Burlington Northern, selling some stock holdings to fund its largest acquisition ever.

The company sold a net $639 million of equities in the quarter, and revealed that this included part of its stake in Procter & Gamble Co , one of its biggest investments.

Results were in line with the preliminary forecast that Berkshire released on May 1 at its annual shareholder meeting in its Omaha, Nebraska, hometown.

Buffett said he had seen an uptick in activity in Berkshire's manufacturing businesses, such as the conglomerate Marmon Holdings Inc and the toolmaker Iscar Metalworking Cos. Cost-cutting also helped this segment's results.

Buffett also said luxury goods units Borsheim's Fine Jewelry and NetJets were seeing business improve from a very, very low level, while results for housing units such as Acme Brick Co and insulation maker Johns Manville were very poor.

Results included $1.41 billion of gains on investment and derivatives, including long-term contracts tied to four equity indexes, including the Standard & Poor's 500 .SPX>.

Berkshire replaced Burlington Northern in that index after splitting its Class B shares 50-for-1 to allow more investors to swap the railroad company's stock for Berkshire stock.

GEICO IMPROVES

Berkshire said insurance underwriting profit rose 12 percent to $226 million, while insurance investment income fell 8 percent to $988 million.

A 6 percent increase in premiums helped Geico Corp, the third-largest U.S. auto insurer, double its pretax underwriting profit to $299 million.

The reinsurer General Re Corp had a $39 million pretax underwriting loss, while other reinsurance operations had a $52 million pre-tax profit.

Profit from utilities and energy rose 10 percent to $223 million, while manufacturing, service and retailing businesses saw profit rise 85 percent to $477 million.

Berkshire's cash stake fell to $25.67 billion as of March 31 from $30.56 billion at year end.

The quarterly report did not address a Wall Street Journal report on Thursday that the U.S. Securities and Exchange Commission is reviewing whether it disclosed its desire to buy Burlington Northern fast enough.

In Friday trading, Berkshire Class A shares closed down $2,000 at $111,500, and its Class B shares fell 18 cents to $74.41. Berkshire's market value is about $184 billion, based on reported shares outstanding.

(Reporting by Jonathan Stempel; Additional reporting by Steve Eder; editing by Gunna Dickson)

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