2/2 © Reuters. FILE PHOTO: Berkshire Hathaway Chairman Warren Buffett walks through the showroom as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc.’s annual shareholders meeting in Omaha 2/2
By Jonathan Stempel (Reuters) – Warren Buffett’s Berkshire Hathaway (NYSE 🙂 Inc said on Saturday that its results are reeling from the worst effects of the COVID-19 pandemic and that it has expanded its aggressive share buybacks with new buybacks worth $ 6.6 billion. First-quarter results suggest that the Omaha, Nebraska-based conglomerate, whose dozens of operating businesses include the BNSF railroad and Geico auto insurance, may have experienced the worst effects of the pandemic, including the loss of tens of thousands of Job positions. In fact, Berkshire said many companies are posting “considerably higher” profits and revenues despite the negative impact of February’s winter storms, although some companies are still suffering. Share buybacks, meanwhile, allow Buffett to deploy excess capital as acquisitions of entire companies become more difficult, reflecting the high valuations and growth of special-purpose acquisition companies to take out business to bag. Berkshire repurchased $ 24.7 billion of its own shares in 2020. Additionally, Berkshire’s share count fell from March 31 to April 22, suggesting that the company repurchased more than $ 1.2 billion in shares. in that period. First quarter operating profit increased 20% to $ 7.02 billion, or about $ 4,600 per Class A share, from $ 5.87 billion a year earlier. Berkshire also reported net income of $ 11.71 billion, or $ 7,638 per Class A share, compared to a net loss of $ 49.75 billion, or $ 30,653 per share, a year earlier. Last year’s results reflected a loss of $ 55.62 billion in investments and derivatives, as equity markets around the world tumbled. Accounting rules require Berkshire to report the gains and losses on the shares it owns, even if it does not buy or sell. Manufacturing operations boosted pre-tax earnings by 15%, and earnings nearly doubled at the Clayton Homes mobile home unit as sales revenue increased and credit losses decreased. Meanwhile, the pre-tax earnings of retailers such as Nebraska Furniture Mart and See’s Candies more than doubled as Berkshire auto dealers sold more vehicles and some results surpassed pre-pandemic levels despite disruptions from the supply chain. One unit still struggling is aircraft parts maker Precision Castparts, which in 2020 saw a writedown of $ 9.8 billion and cut 13,400 jobs. Berkshire said Precision’s quarterly revenue fell 36% and that revenue and profits should remain “relatively low” in 2021 because aircraft production is unlikely to grow significantly. Berkshire’s Class A shares closed at $ 412,500 on Friday, after hitting an all-time high the day before. They are up 19% this year, outpacing the 11% increase in the, but were behind the index by 36 percentage points in 2019 and 2020.