(Reuters) – Warren Buffett’s Berkshire Hathaway Inc reported lower quarterly operating results on Saturday and said the coronavirus pandemic could cause additional damage, even if the returns of stocks like Apple Inc has driven overall profits to over 30 billion USD.
Some of Berkshire̵7;s businesses have recovered from a young age, and analysts are encouraged that revenue is down only 3% from a year earlier.
But COVID-19, storms and low interest rates hurt profits from insurance businesses, including auto insurer Geico and aircraft parts unit Precision Castparts, expected thousands of deaths. part-time job.
Berkshire also bought back its record $ 9.3 billion in underperforming stock in the third quarter, as Buffett still couldn’t find the massive acquisitions that the 90-year-old billionaire wanted to drive growth. .
The total buyback value was $ 16 billion between January and September and looks to total at least $ 2.3 billion in October due to the drop in Berkshire shares.
“Markets will be encouraged by acquisitions,” said Cathy Seifert, an analyst at CFRA Research. “Many companies have halted acquisitions to preserve resources during the pandemic, even though Berkshire did not pay dividends for what it is paying shareholders.”
Operating profit in the third quarter fell 32% to $ 5.48 billion, or about $ 3,488 per share of class A, from $ 8.07 billion a year earlier.
Net income rose 82% to $ 30.1 billion, or $ 18,994 per share of Class A, from $ 16.5 billion, or $ 10,119 per share. Total revenue reached 63 billion USD.
NEW BENEFITS FOR CASH
Berkshire reported a $ 24.8 billion return on investments like Apple, whose shares rose 27% in the quarter and at $ 111.7 billion so far, the largest share held by Berkshire. holding 46% of the portfolio.
However, it appears that Berkshire may have sold some of Apple’s shares because the stake should have been several billion dollars higher, based on previously disclosed shares, if no shares were ever sold.
Net results are unstable because an accounting rule requires Berkshire to report unrealized gains and losses on its shares. The company posted a profit of $ 26.3 billion in the second quarter, but lost nearly $ 50 billion in the first quarter.
Despite the acquisitions, Berkshire ended the quarter with $ 145.7 billion in cash and equivalents.
The Omaha, Nebraska-based company has also found new ways to spend cash, invest $ 6 billion in five Japanese businesses, and support the hosting company’s initial public offering. Snowflake Inc. data
Jim Shanahan, an analyst with Edward Jones with a “buy” rating on Berkshire, said: “It’s been a good quarter and I’m happy with the level of cash deployment. “If we have a second pandemic, Buffett is still positioned to take advantage.”
Precision, bought by Berkshire in 2016 for $ 32.1 billion in its largest ever acquisition, has been hit hard by the aerospace industry’s slowdown, including in the second quarter when Berkshire grossed $ 9.8 billion.
Profit before tax for the third quarter fell 80% and Berkshire expects it to cut workforce by 40% by the end of 2019.
That equates to about 13,400 jobs, or more than 3,400 jobs that Berkshire previously disclosed has been lost.
Although Berkshire did not receive major neckings in the third quarter, it said the pandemic could be forced to further.
Profits from insurance fell 58% to $ 802 million, reflecting lower premiums at Geico, COVID-19, Hurricane Laura and Sally, and investment returns falling as interest rates fell.
Geico has awarded drivers $ 2.5 billion in credits upon policy renewal this year, and Berkshire says accounting of those credits will affect underwriting results until March 2021. .
Profits fell only 8% on the BNSF railway, as the cost-cutting helped offset lower volume of transport. “That’s in good shape as sales and volume recover,” Shanahan said.
The results improved in Berkshire’s energy businesses, and its real estate brokerage profits more than doubled as low interest rates drove more home buyers.
The New York-based Jonathan Stempel report; Edited by Jason Neely, Diane Craft and Grant McCool