Berkshire Hathaway shakes off damaging effects of pandemic

Berkshire Hathaway, the conglomerate led by Warren E. Buffett, significantly recovered from the adverse economic effects of the pandemic in the second quarter, saying on Saturday it had $ 28.1 billion in net profits, up from $ 26.3 billion. dollars a year earlier.

Its biggest gains were in its rail, utilities and energy businesses, all of which had suffered significant declines in 2020 as the pandemic significantly slowed the global economy.

“During the second half of 2020 and into 2021,” the company said, many of its manufacturing, service and retail businesses “saw a significant recovery in revenue and profits, in some cases exceeding prepandemic levels “.

Berkshire also reported slower buybacks of its own shares, at just over $ 6 billion in the quarter, from $ 6.6 billion in the first quarter.

The conglomerate reported operating profit of $ 6.69 billion as of June 30, up 21% from the same quarter last year. Profits from its rail operations increased 34% in the second quarter, reflecting higher freight volumes and improved productivity.

Profits from its utilities and energy business increased 21% from a year ago, boosted by revenues from its gas pipelines.

Real estate brokerage revenues increased $ 76 million in the second quarter and $ 150 million in the first half of the year, as demand for housing and mortgages jumped. The Berkshire car dealership chain also reported a significant increase in profits, up 29.4% from 2020 as auto sales volume increased.

But Berkshire said its insurance underwriting operating profit fell to $ 376 million from $ 806 million a year ago.

“The underwriting results of some of our commercial insurance and reinsurance businesses were negatively affected in 2021 and 2020 by the estimated losses and costs associated with the Covid-19 pandemic,” the company said, including bonuses and sunk costs to maintain customer service levels.

Geico’s revenues were also affected. Last year, when policyholders drove significantly less during pandemic lockdowns, the company had far fewer claims. With the return of driving, claims rose, he said, resulting in second-quarter profit of $ 626 million, up from $ 2.06 billion a year earlier.

The conglomerate said its operating revenues in manufacturing, services and retailing had jumped to $ 3 billion, from $ 1.45 billion a year earlier.

“Retail customer volumes have increased due to increased customer utilization, favorable weather impacts and an increase in the average number of customers,” he said.

At the company’s annual investor meeting in May, Mr. Buffet and Berkshire vice chairman Charles T. Munger spoke about the “hot” pace of the economy and how it differs from the start of the year. ‘last year.

Berkshire said the pandemic could still affect its future results, citing “the ability to vaccinate significant numbers of people in the United States and around the world as well as the long-term effect of the pandemic on the demand for some of our products and services. . “

About Mary Moser

Check Also

Tips for buying a house during the holidays | Immovable

The holidays are a unique time to buy a house. Sellers are scarce, the weather …

Leave a Reply

Your email address will not be published.