Buffett's Berkshire posts record net loss on coronavirus, operating profit rises

Buffett’s Berkshire posts nearly $50b loss

Buffett’s Berkshire posts nearly $50b loss

Warren Buffett's company reported a almost $50 billion loss on Saturday because of a huge drop in the paper value of its investments, though the company is still sitting on a huge pile of cash.

Berkshire's first-quarter net loss totalled US$49.75 billion (RM214 billion), or US$30,653 per Class A share, reflecting US$54.52 billion of losses from investments, mainly common stocks.

"The amount of investment gains/losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules", the company said in its earnings release. By that measure, Berkshire's operating earnings improved to $5.87bn, or $3,617.62 per Class A share, from $5.56bn, or $3,387.56 per Class A share.

Berkshire Hathaway is sitting on a pile of more than $137bn of cash because Mr Buffett has struggled to find major acquisitions at suitable valuations recently.

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A year earlier, the conglomerate reported profits of US$15.5 billion.

Buffett and Vice Chairman Greg Abel will likely discuss the pandemic at Berkshire's annual meeting on Saturday afternoon, which will be streamed on Yahoo Finance.

Buffett's Berkshire posts nearly $50 billion loss on coronavirus, operating profit rises
Buffett’s Berkshire Hathaway Reports Nearly $50 Billion Loss

In documents filed Saturday, Berkshire noted that until mid-March many of its companies were posting "comparative revenue and earnings increases" over the same 2019 period.

The smaller operations cut salaries and furloughed workers, and retailers such as See's sweets and Nebraska Furniture Mart closed stores.

"Historically, Buffett has been so visible in times of crisis, and encouraged investors to take advantage of market selloffs, but if he doesn't see opportunities even in his own stock, what are we to think?" said Jim Shanahan, an analyst at Edward Jones & Co.in St. Louis.

Several of its businesses including railroads, utilities, and insurance have been deemed essential and allowed to continue operating, but their revenues "slowed considerably" in April.

Expects 2020 underwriting results will be affected by lower premiums for certain business attributable to premium credits granted to policyholders and when premiums are a function of the insured's payroll.

Moreover, Berkshire is already heavily invested in some of those industries, such as energy, airlines and financial services, according to Mr. Smead.

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