Monday, July 15, 2024

Berkshire Hathaway, the conglomerate run by Warren Buffett, posted its first overall quarterly loss in a year on Saturday on the falling prices of Apple and other stocks it owns, though it said improvement in its insurance operations boosted operating profit to a record.

Its wide-ranging portfolio of businesses, ranging from insurance to energy to consumer goods like See’s candies, generally fared better in the third quarter than in the same quarter a year earlier. And Berkshire’s cash stake swelled to a record $157.2 billion in the third quarter, when it sold $5.3 billion more stocks than it bought.

Berkshire also slowed repurchases of its own stock, buying back $1.1 billion in the third quarter.

Investors watch Berkshire closely because its results often reflect broader economic trends and because of Mr. Buffett’s reputation as a savvy investor.

The third-quarter net loss more than quadrupled to $12.77 billion from about $2.8 billion a year earlier.

Results included $23.5 billion in losses from investments, primarily reflecting a 12 percent decline in the stock price of Apple, in which Berkshire owned a $157 billion stake, as of Sept 30.

Berkshire’s net results swing widely from quarter to quarter because accounting rules require the company to report investment gains and losses even if it buys and sells nothing. Mr. Buffett says the resulting volatility is usually meaningless.

Operating profit rose 41 percent to $10.76 billion from $7.65 billion a year earlier.

Insurance operations generated $4.89 billion of profit, as the Geico car insurer and reinsurance businesses made money after posting losses in 2022, while rising interest rates boosted income generated from U.S. Treasuries.

Berkshire also benefited from a relatively quiet Atlantic hurricane season, which reduced catastrophe losses, unlike in 2022 when it lost $2.7 billion from Hurricane Ian.

But revenues at its BNSF freight railroad were down 15.3 percent in the quarter on lower volumes and higher non-fuel expenses. Its businesses tied to the housing market also saw declines because of rising mortgage interest rates and fewer existing homes for sale as well as a drop in demand for mortgage refinancing. Revenues from its real estate brokerage business declined 13.8 percent in the third quarter.

Berkshire also reported that revenues from its apparel and footwear businesses fell 11.2 percent on a decline in customer demand.

Mr. Buffett, 93, has run Berkshire since 1965. His $117.5 billion net worth ranks fifth worldwide according to Forbes magazine.

Berkshire shares are up 14 percent this year, matching the return of the S&P 500.

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