Profit up 87% at Buffett's firm but virus slows businesses

OMAHA, Neb. Warren Buffett’s company reported an 87% jump in its second-quarter profit as the value of its investment portfolio increased with the stock market, but it took a roughly $10 billion write down on the value of its aircraft parts manufacturing business because of the economic impact of the coronavirus pandemic.

Berkshire Hathaway Inc. said Saturday that it earned $26.3 billion, or $16,314 per Class A share, during the second quarter. That’s up from $14.1 billion, or $8,608 per share, a year ago.

Berkshire said it cut the value of its Precision Castparts unit because of how much the pandemic has hurt air travel and businesses that support that airline industry.

Buffett has long said Berkshires operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely. By that measure, Berkshires operating earnings declined 10% to $5.5 billion, or $3,420.48 per Class A share, as most of its businesses were hurt by restrictions related to the coronavirus pandemic. That’s down from $6.1 billion, or $3,754.83 per share.

The analysts surveyed by FactSet expected operating earnings per Class A share of $3,182.06.

Berkshire was holding nearly $147 billion cash and short-term investments at the end of the second quarter, but Buffett did use $5.1 billion during the quarter to repurchase Berkshire shares.

Buffett also found a way to use more of that cash after the quarter ended. First, he agreed to buy Dominion Energys natural gas pipeline and storage business for $4 billion and take on $5.7 billion of Dominion debt. Then Buffetts company bought roughly $2.1 billion worth of Bank of America stock in late July and early August to give it control of 11.9% of the bank’s stock.

Berkshire Hathaway Inc. owns more than 90 companies, including BNSF railroad and insurance, utility, furniture and jewelry businesses. The company also has major investments in such companies as Apple, American Express, Coca-Cola and Bank of America.

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