New York: Berkshire Hathaway, the conglomerate run by billionaire investor Warren Buffett, on Saturday reported a sharp decrease in earnings in the third quarter, reflecting the turbulent financial markets as well as a slowdown in the US economic recovery with a spike in COVID-19 cases.
Profits fell by one-third to $10 billion, down from $30 billion in the same three months of 2020, when the economy was still in the process of reopening from pandemic shutdowns.
Berkshire’s bottom line was dragged down by its giant investment portfolio, which fell 85 per cent from a year ago. But profits at Berkshire’s operating businesses, which include a railroad as well as a variety of manufacturing and retail businesses that mirror the broader US economy, also disappointed. Income there rose just 18 per cent from a year ago. That was much less than the 40 per cent jump that some analysts had predicted and slower than the 21 per cenet increase in profits those operating businesses had in the second quarter.
Insurance losses
Berkshire recorded nearly $800 million in losses from insurance underwriting, as claims from bad weather, including Hurricane Ida, increased. And while the income from premiums at its popular car brand Geico rose in the quarter, its losses from accident claims rose even more as drivers returned to the roads.
In its railroad business, Berkshire said shipping volumes rose 4.4 per cent in the third quarter, showing the economy’s continued growth. But fuel costs rose nearly 80 per cent, muting profits.
Overall, Berkshire said its businesses were affected by “ongoing global supply chain disruptions” as well as higher prices for raw materials.
