Warren Buffett'S Berkshire Hathaway Q2 2020 Report: Net Earnings Increased To $26,3 Billion
Billionaire Warren Buffett's investment company Berkshire Hathaway increased its net profit in the second quarter of 2020 thanks to the growth in the value of its investments in the Wake of the rise in stock markets after the collapse in the first quarter due to the coronavirus pandemic.
In the reporting period, the company received $26,295 billion in net profit compared to $14,1 billion a year earlier. Earnings per class "A" share increased to $16,314 from $8,608 a year earlier.
The net profit figure takes into account $9,8 billion in writedowns related to Precision Castparts, which Berkshire bought in 2016 for $32 billion. The write-off of goodwill and other intangible assets of Precision Castparts, a manufacturer of equipment for the aerospace and energy industries, is associated with a serious deterioration in the company's position due to the coronavirus pandemic. In the first half of the year, it was forced to cut 10,000 jobs due to falling demand for its products.
Berkshire's operating profit, which Buffett calls more indicative because it does not take into account highly volatile indicators of income/loss from investments and derivatives, fell by 10% in the second quarter, to $5,5 billion.
Berkshire's quarterly revenue fell 11% to $56,84 billion. The revenue from the insurance business fell 10% to $47,61 billion, while premiums collected rose 5% to $15,6 billion. Revenue from the division, which includes rail, energy, and utility businesses, fell 15% to $9,23 billion.
Berkshire's investment income soared almost four times to $40,09 billion.
The total amount of assets of the investment company at the end of the second quarter was $788,133 billion compared to $817,729 billion at the end of 2019.
Including the portfolio of shares owned by Berkshire, it was estimated at $207,454 billion ($248,027 billion at the end of 2019). Approximately 71% of this amount is concentrated in the shares of four companies: American Express ($14,4 billion), Apple ($91,5 billion), Bank of America ($22,6 billion), and Coca-Cola ($17,9 billion). As of December 31, 2019, the combined share of these companies in the total portfolio was about 60%.
In the past quarter, Berkshire Hathaway bought back its shares for $5,1 billion, and the first half of the year - for $6,7 billion.
Since the beginning of this year, the investment company's class "A" shares have fallen by 7.4%.