Berkshire Hathaway Posts Massive $43.8 Billion Loss; operating results improve – Reuters

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

Aug 6 (Reuters) – Falling U.S. stock prices hurt Berkshire Hathaway Inc’s (BRKa.N) second-quarter net profit, as the company run by billionaire Warren Buffett posted a $43.8 billion loss .

Berkshire nevertheless posted better operating results, as improved results from reinsurance and the BNSF railroad offset a loss from auto insurer Geico, where auto parts shortages and rising vehicle prices inflated claims losses.

Rising interest rates helped Berkshire’s insurance units generate more cash from investments, while the strengthening US dollar boosted earnings from the company’s investments in European and Japanese debt.

Investors are watching Berkshire closely because of Buffett’s reputation and because the results of his dozens of operating units in insurance, railroad manufacturing, energy and retail often reflect broader economic trends.

Berkshire’s net loss was $29,754 per Class A share, and compared with net income of $28.1 billion, or $18,488 per Class A share, a year earlier.

Quarterly operating profit rose 39% to $9.28 billion, or about $6,326 per Class A share, from $6.69 billion, or $4,424 per Class A share, a year earlier.

Berkshire has slowed buybacks of its own shares, repurchasing $1 billion in the quarter and $4.2 billion so far this year.

It also bought more than $6.1 billion worth of stock, up from $51.1 billion in the first quarter, when it took large stakes in oil companies Chevron Corp and Occidental Petroleum Corp.

Berkshire ended June with $105.4 billion in cash and cash equivalents. It expects to complete its $11.6 billion takeover of insurance company Alleghany Corp (YN) in the fourth quarter.

The bottom line fluctuates wildly because the Omaha, Nebraska-based conglomerate has to report investment gains and losses on its stock holdings, even if it doesn’t buy or sell anything.

That proved a drag in the second quarter, as Berkshire recorded $53 billion in investment and derivatives losses.

Shares of three major holdings – Apple Inc (AAPL.O), Bank of America Corp and American Express Co (AXP.N) – each fell more than 21%.

Buffett urges investors to ignore fluctuations, and Berkshire will make money if stocks rise over time.

In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the COVID-19 pandemic took hold, but gained $42.5 billion for the full year.

Berkshire has dozens of companies that also include its namesake energy business, several manufacturing companies, and consumer companies such as Duracell batteries, Fruit of the Loom underwear, and See’s Candies.

Shares of the company outperformed the broader US market in 2022, falling 2% against a 13% drop in the Standard & Poor’s 500. (.SPX)

Reporting by Jonathan Stempel in New York; edited by Jason Neely and Diane Craft

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