Berkshire Hathaway’s operating profit from its businesses rose 6.6% in the third quarter but net income fell due to lower investment gains.

Warren Buffett’s conglomerate had operating earnings of $4.85 billion, amounting to $1.97 per Class B share or $2,951 per Class A share, in the three months that ended Sept. 30, compared to $4.55 billion a year earlier.

The increase was fueled by revenue and pre-tax profits from Berkshire companies in manufacturing, utilities and energy. Pre-tax earnings from manufacturing businesses jumped to about $2 billion, up from $1.3 billion a year ago.

But Berkshire also reported that net income, which includes investments and derivatives, totaled $7.2 billion, or $2.92 per share of Class B stock, down 23.7% from the third quarter of 2015. The year-ago results benefited from a $4.4 billion gain on Berkshire’s investment in Kraft Heinz.

Berkshire’s “plain vanilla” portfolio made up primarily of publicly traded stocks contributed $2 billion to earnings, while its derivatives positions contributed $297 million. In the same period last year, its investment portfolio generated $4.9 billion in earnings.

“Although net income is the standard measure of corporate performance, Buffett has said Berkshire’s operating earnings are a better gauge because net income is affected by swings in the paper value of its insurance-like derivatives and by investment gains and losses taken during the reporting period,” the Omaha Herald noted.

Operating profit from Berkshire’s insurance businesses improved to $850 million, while operating profit at the railroad, utilities and energy segments held near flat at $1.95 billion. Burlington Northern Santa Fe, Berkshire’s railroad, reported a 12% decline from the year-ago period as a sluggish energy market continued to weigh on freight volume and prices.

“The biggest drag on earnings is [the effort in] turning the railroad around,” Bill Smead, chief executive of Smead Capital Management, a Berkshire shareholder, told The Wall Street Journal.

Analysts surveyed by FactSet had predicted Berkshire’s third-quarter operating income at $2.02 per Class B share or $3,030 per Class A share.

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