Warren Buffett’s Berkshire Hathaway has said its results are rebounding from the worst effects of the Covid-19 pandemic, and that it has extended its aggressive stock repurchases with $6.6bn of new buybacks.
First-quarter results suggest that the Omaha, Nebraska-based conglomerate that owns dozens of businesses, is through the worst effects of the pandemic, including the loss of tens of thousands of jobs.
Berkshire said many businesses were now posting “considerably higher” earnings and revenue despite the negative impact of February winter storms, though some businesses are still suffering.
The stock repurchases, meanwhile, allow Buffett to deploy excess capital as takeovers of whole companies become more difficult, reflecting high valuations and the growth of special purpose acquisition companies to take businesses public.
Berkshire repurchased $24.7bn of its own stock in 2020. In addition, Berkshire’s share count fell from March 31 to April 22, suggesting that the company repurchased more than $1.2bn of stock in that period.
First-quarter operating profit increased 20 per cent to $7.02bn, or about $4,600 per Class A share, from $5.87bn a year earlier.
Berkshire also reported net income of $11.71bn, or $7,638 per Class A share, compared with a net loss of $49.75bn, or $30,653 per share, a year earlier.
Last year’s results reflected a $55.62bn loss on investments and derivatives, as stock markets worldwide plunged.
Manufacturing operations boosted pre-tax profit by 15 per cent, with earnings nearly doubling at the Clayton Homes mobile housing unit as sales revenue increased and credit losses fell.
Meanwhile, pre-tax profit from retailers such as the Nebraska Furniture Mart and See’s Candies more than doubled, as Berkshire’s auto dealerships sold more vehicles and some results surpassed pre-pandemic levels despite supply chain disruptions.
One unit still struggling is aircraft parts maker Precision Castparts, which in 2020 took a $9.8bn writedown and shed 13,400 jobs.
Berkshire said Precision’s quarterly revenue fell 36 per cent, and revenue and earnings should remain “relatively low” in 2021 because aircraft production is unlikely to grow significantly.
Class A shares of Berkshire closed Friday at $412,500, after hitting a record high a day earlier. They have risen 19 per cent this year, topping the 11 per cent gain in the Standard & Poor’s 500, but trailed the index by 36 percentage points in 2019 and 2020.