New York: Berkshire Hathaway, the conglomerate run by Warren Buffett, on Saturday reported net earnings of $28.1 billion for the second quarter ended June 30, up from $26.3 billion a year earlier, reflecting a substantial recovery from the economic effects of the pandemic.
Berkshire’s biggest gains were in its railroad, utilities and energy businesses, which suffered significant declines in 2020 as the pandemic significantly slowed the world economy.
“Over the second half of 2020 and continuing in 2021,” the company said, many of its manufacturing, service and retailing businesses “experienced significant recoveries in revenues and earnings, in some instances exceeding pre-pandemic levels.”
Berkshire also reported slower repurchases of its own stock, to a little over $6 billion during the quarter, down from $6.6 billion in the first quarter.
gain from the same quarter last year
The conglomerate reported operating income of $6.69 billion in the three months ended June 30. Earnings from its railroad businesses rose 34 per cent in the second quarter, reflecting higher freight volumes and improved productivity.
Earnings from its utility and energy business increased 21 per cent from last year, boosted by income from its natural gas pipelines.
Real estate brokerage earnings increased $76 million in the second quarter and $150 million in the first half of the year, as demand for housing and mortgages jumped. Berkshire’s chain of car dealerships also reported a significant increase in earnings, up 29.4 per cent from 2020, as the volume of auto sales rose.
The billionaire's Berkshire Hathaway repurchased just $6 billion of shares during the second quarter, short of the $6.6 billion it bought back during the first three months of 2021 and the lowest it's been since the same period last year, according to the conglomerate's second quarter earnings. He also was a net seller of stocks for the third quarter in a row.
That left his cash pile stubbornly high at $144 billion, just slightly below the first quarter. Buffett's been faced with a high-class problem in recent years: Too much cash, and too few opportunities. He's struggled to find ways to deploy those funds into higher-returning opportunities and has increasingly turned to buybacks as one option. But Berkshire's stock, already a challenge because of its lack of liquidity, has rallied in recent months, with the Class A shares gaining 8.5 per cent in the second quarter.
Insurance earnings hit
But Berkshire said its insurance underwriting operating earnings fell to $376 million from $806 million a year ago.
Underwriting results for certain of our commercial insurance and reinsurance businesses were negatively affected in 2021 and 2020 by estimated losses and costs associated with the COVID-19 pandemic, including uncollectable premiums and costs to maintain customer service levels
Geico’s earnings were hit as well. Last year, when policyholders drove much less during pandemic lockdowns, the company had far fewer claims. With more drivers back on the roads, claims have increased, it said, resulting in earnings of $626 million in the second quarter, down from $2.06 billion a year earlier.
The conglomerate said its manufacturing, service and retailing operating income jumped to $3 billion from $1.45 billion a year earlier.