Berkshire Hathaway walks through the exhibit hall as shareholders gather to hear billionaire investor Berkshire Hathaway speak at Berkshire Hathaway’s annual shareholder meeting in Omaha, Nebraska, USA, May 4, 2019 Chairman Warren Buffett. REUTERS/Scott Morgan//File Photo

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Aug 6 (Reuters) – Billionaire Warren Buffett’s Berkshire Hathaway (BRKa.N) posted a $43.8 billion loss as falling U.S. stocks hit second-quarter earnings Gave.

Nonetheless, Berkshire has lost approximately $9.3 billion from its operating business as reinsurance and improvements from BNSF Rail offset losses at Geico Auto Insurance, where shortages of auto parts and rising vehicle prices pushed up accident losses. generated profits.

Rising interest rates and dividend payments allowed Berkshire’s insurance division to generate more money from its investments.

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Berkshire has also slowed its share buybacks, including its own stock, but remained with $105.4 billion in cash and cash equivalents at the end of June.

“It shows the capricious nature of the market,” said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, who has invested more than $8 billion, 17% of which is in Berkshire. I have,” he said. “It’s business as usual at Berkshire Hathaway.”

Investors are watching Berkshire closely because Buffett’s reputation and results from the Omaha, Nebraska-based conglomerate’s dozens of business units often reflect broader economic trends.

Berkshire owns stable income companies such as the energy company of the same name, several insurance and industrial companies, and well-known consumer products such as Dairy Queen, Duracell, Fruit of the Loom and Seeds Candies. It owns dozens of businesses, including brands.

Berkshire said in its quarterly report that “substantial supply chain disruptions and rising costs continue” due to the emergence of new coronavirus variants and geopolitical disputes, including Russia’s invasion of Ukraine. .

However, it said the direct loss to the company would not be material, despite the impact of higher material, transportation and labor costs.

profit volatility

Net income suffered from Berkshire’s $53 billion loss from investments and derivatives.

Apple (AAPL.O), Bank of America and American Express (AXP.N) stocks each fell more than 21%, while the Standard & Poor’s 500 Index fell 16% (. SPX).

Accounting rules require Berkshire to report losses with results, even if no trades are made.

Buffett has urged investors to ignore volatility, and Berkshire will make money if the stock rises over time.

In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the pandemic took hold, but made $42.5 billion for the full year.

Net loss for the quarter was $29,754 per Class A share, compared with net income of $28.1 billion, or $18,488 per Class A share, in the year-ago quarter.

Berkshire’s operating income of $9.28 billion (approximately $6,326 per Class A share) was up 39% from $6.69 billion ($4,424 per Class A share) in the prior year. Foreign exchange gains from foreign debt totaled $1.06 billion.

Geico’s pre-tax loss of $487 million was offset by pre-tax gains in property and casualty reinsurance of $976 million and after-tax insurance investment income of $1.91 billion, up 56%. rice field.

BNSF profit increased by 10%. Profits at Berkshire Hathaway Energy increased by 4% for him, but higher earnings per vehicle for him due to fuel surcharges partially offset lower freight volumes and higher fuel costs.

Berkshire repurchased just $1.0 billion of its stock in the first quarter, up from $3.2 billion in the first quarter, compared to $51.7 billion in 2020 and 2021.

Equity purchases of $6.15 billion were down from $51.1 billion in the first quarter, when it acquired major stakes in oil companies Chevron Corp and Occidental Petroleum Corp.

Berkshire plans to acquire insurance company Alleghany Corp (YN) for $11.6 billion in the fourth quarter.

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Reported by Jonathan Stempel, New York.Editing by Jason Neely and Diane Kraft

Our Standards: Thomson Reuters Trust Principles.

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