Buffett's Berkshire hurt by pandemic even as Apple boosts profit

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

FILE PHOTO: Berkshire Hathaway Chairman Warren Buffett walks through the exhibit hall as shareholders gather to hear from the billionaire investor at Berkshire Hathaway Inc’s annual shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan

The conglomerate disclosed it repurchased a record $9.3 billion of its underperforming stock in the quarter, and $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% to $5.48 billion, or about $3,488 per Class A share, from $8.07 billion a year earlier.

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

Net results included $24.77 billion of gains from investments such as Apple, which rose 27% in the quarter and at $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 $26.3 billion second-quarter profit, but lost $49.75 billion in the first quarter. It ended September with $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.

Year-over-year profit fell just 8% at the BNSF railroad despite lower shipping volumes.

But at Precision, where Berkshire had taken a $9.8 billion writedown in August, quarterly pretax profit fell 80%, and expects that by year end it will have shed 40% of its workforce.

That equates to roughly 13,400 jobs, or 3,400 more than Berkshire previously disclosed had been lost.

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