Pandemic Hits Berkshire Hathaway Profits

Warren Buffett's Berkshire Hathaway on Saturday posted a lower operating profit as the coronavirus pandemic weighed on some of its businesses, though gains in stocks such as Apple fueled a big quarterly net profit.

The conglomerate disclosed it repurchased a record US$9.3 billion of its underperforming stock in the quarter, and US$16 billion so far this year, as Buffett remained unable to find huge acquisitions to spur growth.

Berkshire also said that while some businesses are rebounding from the pandemic's depth, the pain persists at its Precision Castparts aircraft and industrial parts unit, which is expecting thousands of additional job losses.

Third-quarter operating profit fell 32 percent to US$5.48 billion, or about US$3,488 per Class A share, from US$8.07 billion a year earlier.

Meanwhile, net income rose 82 percent to US$30.14 billion, or US$18,994 per Class A share, from US$16.52 billion, or US$10,119 per share, a year earlier.

Net results included US$24.77 billion of gains from investments such as Apple, which rose 27 percent in the quarter and at US$111.7 billion is by far Berkshire's biggest stock holding.

It appeared nonetheless that Berkshire may have sold some Apple stock in the quarter because the stake should have been a few billion dollars higher, based on previously disclosed stakes, if none of it were sold.

Net results are volatile because an accounting rule requires Berkshire to report gains and losses on its common stock investments even if it does no buying and selling.

The company had posted a US$26.3 billion second-quarter profit, but lost US$49.75 billion in the first quarter. It ended September with US$145.7 billion of cash and equivalents.

Berkshire said most of its operating businesses have been negatively affected by the pandemic, though in the third quarter several experienced significant increases in revenue and earnings from the second quarter. (Reuters)