OMAHA, Neb. Warren Buffett’s conglomerate reported an 82% increase in third-quarter profits as their portfolio value skyrocketed, but Berkshire Hathaway says the coronavirus pandemic continues to harm their types of businesses. such as the BNSF railway.
said Saturday it earned $ 30.1 billion, or $ 18,994 per Grade A share, for the quarter. This is up from $ 16.5 billion, or $ 10,119 per Grade A share, a year ago. Much of the return is attributable to the estimated $ 24.8 billion in Berkshire investments, including large stakes in Apple and Bank of America.
Buffett asserted that Berkshire’s operating income provides a better view of quarterly performance as they exclude investments and derivatives, which can be very different. That way, Berkshire’s operating income fell 32%, to $ 5.49 billion, or $ 3,452.45 per Class A share. This is down from $ 8.07 billion, or 4,943. , $ 04 per Grade A share, one year earlier.
Four analysts surveyed by FactSet expect Berkshire to report operating earnings per Class A share of $ 3,587.63.
Berkshire said its revenue fell 3% in the quarter, to $ 63.02 billion. Jim Shanahan, an analyst with Edward Jones, said he was impressed to see Berkshire’s revenue sustained at nearly last year levels amid challenges in the economy as a whole.
“I think you’re going to struggle to find more companies that, if any, are just reporting modest revenue declines,” Shanahan said.
BNSF said profits fell 8%, to $ 1.35 billion, in the railroad sector due to the coronavirus continuing to slow freight traffic. Berkshire said the rail line carried 8% less cargo during the quarter, better than in the second quarter, when volumes fell 18% when business shutdowns related to viruses, but remained significantly lower. with last year.
Berkshire’s utility unit was a bright spot on the report with $ 1.395 billion in profit, up 18% from last year. Utilities have been supported by higher tax credits for wind power and other renewable power projects posted online.
Berkshire said its aircraft division maker Precision Castparts continued to grapple with the impact of the pandemic on the aviation industry, as the company reported an 80% drop in pre-tax earnings. Precision, which raised $ 10 billion in Q2, said it expected a 40% cut to its workforce by the end of the year.
Berkshire said it spent $ 9 billion on its own stock repurchase in the third quarter, almost double the record $ 5.1 billion it spent buying back its shares in the second quarter. But even after the acquisitions and some investments that Berkshire made during the quarter, the company still holds $ 145.7 billion in cash and short-term investments at the end of the third quarter.
Berkshire continues to hold large amounts of cash despite buying about $ 2.1 billion in Bank of America shares over the summer and agreeing to pay $ 4 billion for its pipeline and natural gas storage business. by Dominion Energy. Berkshire didn’t finish the first part of the Dominion deal until earlier this month.
Berkshire also said in August that it had just over 5% of the shares in Japan’s five major business companies, but that that investment of around $ 6 billion was being made progressively over the previous year so it was. Nor did a big impact on Berkshire’s third quarter cash flow.
Berkshire owns more than 90 companies, including Geico insurance and utilities, furniture, manufacturing and jewelry businesses. The Omaha, Nebraska-based group also has large investments in companies such as American Express, Moody’s and Coca-Cola.