Hathaway – COOPER GENERAL NEWS

Warren Buffett at Berkshire Hathaway’s annual meeting in Los Angeles, California. May 1, 2021.

Gerard Miller | CNBC

Berkshire Hathaway’s operating income continued to rebound as its myriad of businesses from energy to railroads benefited from the economic reopening.

The conglomerate reported operating earnings of $6.69 billion in the second quarter, up 21% from $5.51 billion in the same period a year ago, according to its earnings report released on Saturday.

Overall earnings, which reflect Berkshire’s fluctuating equity investments, increased 6.8% year over year to $28 billion in the second quarter.

Chairman and CEO Warren Buffett kept buying back Berkshire shares aggressively instead of making sizable acquisitions. The company repurchased $6 billion of its own stock in the second quarter, bringing the six month total to $12.6 billion. Berkshire bought a record $24.7 billion of its own stock last year.

At the end of June, Berkshire’s cash pile stood at $144.1 billion, holding steady from last quarter’s level and still near a record despite the company’s massive buyback program.

The results came as the conglomerate’s stock wiped out all of its 2020 losses and hit a record high in the period. So far in third quarter, Berkshire’s B shares are up another 2%, bringing their year-to-date gain to over 23%.

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As economic activity continues to grind back to life from the pandemic with more commodities and goods being shipped around the country, Berkshire’s Burlington Northern Santa Fe railroad stands to benefit. Earnings for railroads, utilities and energy jumped more than 27% from a year ago in the period to $2.26 billion, Berkshire said. The conglomerate’s other businesses, including homebuilders and a paint-maker, are also seeing a boost.

Though Berkshire acknowledged the quarterly results look stellar because they are bouncing back from a low base a year ago and the company is unsure of when results will truly return to normal.

“The COVID-19 pandemic adversely affected nearly all of our operations during 2020 and in particular during the second quarter, although the effects varied significantly,” Berkshire said in the earnings report Saturday. “The extent of the effects over longer terms cannot be reasonably estimated at this time.”

At the height of the Covid crisis, Berkshire experienced a drastic slowdown with its operating income falling 10% in the second quarter of 2020 year over year and tumbling 30% in the third quarter.

Berkshire said the risks from the pandemic still remain and could impact its results in the future.

“Risks and uncertainties resulting from the pandemic that may affect our future earnings, cash flows and financial condition include the ability to vaccinate a significant number of people in the U.S. and throughout the world as well as the long-term effect from the pandemic on the demand for certain of our products and services,” the conglomerate said.

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Berkshire Hathaway, the Warren E. Buffett-led conglomerate, posted net income of $ 11.7 billion in the first quarter on Saturday and made a gain on a loss of $ 49.7 billion a year ago as the paper value its investment income increased.

Using Berkshire’s preferred financial metric, operating income, the company grew nearly 19 percent year over year as its numerous subsidiaries – from power generation to the Burlington Northern Santa Fe Railroad to consumer brands – improved their performance.

Among the companies that saw the biggest improvements was the railroad, which benefited from higher freight volumes as the American economy recovered from the pandemic. Berkshire’s construction products and consumer subsidiaries also saw higher sales as home construction and retail purchases increased.

However, other parts of Mr. Buffett’s empire continued to suffer, particularly industrial manufacturers like Precision Castparts, whose aerospace parts were less in demand due to the decline in travel associated with Covid.

Berkshire’s extensive insurance business painted a mixed picture. Geico auto insurance claims declined in the quarter, although other parts of the insurance business were impacted by increased claims related to the devastating North American winter storm in February.

Berkshire posted capital gains of $ 2.8 billion for the quarter, compared to losses of $ 54.5 billion in the 2020 quarter.

The conglomerate also repurchased $ 6.6 billion in shares during the quarter as Mr Buffett continues to spend his company’s enormous cash supply – currently more than $ 145 billion – on buying back Berkshire stocks rather than making large acquisitions to do.

The earnings report came hours before Berkshire prepared for its annual investor meeting, when Mr. Buffett’s loyal supporters flew to the company’s hometown, Omaha, Neb., For decades to celebrate one of the world’s most famous investors.

However, this year it will be held virtually again to bow to the pandemic and collect restrictions. And for the first time, it’s not in Omaha, but in Los Angeles, where Charles T. Munger, Berkshire’s 97-year-old vice chairman, lives.

Annual meetings in Berkshire are known for providing a forum for the company’s shareholders to ask 90-year-old Mr. Buffett for their thoughts.

Topics expected this year include multi-year topics such as politics, potential takeover targets for Berkshire, and succession as CEO once he steps down. Questions also arise about how the conglomerate’s stock performance can be improved – it has outpaced the S&P 500 for the past five years.

Investors are also likely to ask about topics that are more uncomfortable for Mr. Buffett, such as efforts to get American companies to take more action on environmental and social issues. Mr Buffett urged shareholders this year to turn down proposals to force Berkshire to report more on its subsidiaries’ efforts to combat climate change and workplace diversity, and ask questions about whether its approach is inconsistent.