Berkshire Hathaway Inc’s profit swelled in the fourth quarter of last year, boosted by gains in many of its businesses and common stock investments such as Apple Inc, the firm, led by chairman and CEO Warren Buffett, said on Saturday.
Annual earnings reached a record high, it added.
Berkshire also signaled renewed confidence in its own stock, repurchasing US$6.9 billion in the fourth quarter, boosting total buybacks last year to a record US$27 billion.
Photo: Reuters
However, the pace of buybacks has slowed, with Berkshire, whose share price is 2 percent below its record high, repurchasing just US$1.2 billion stocks this year.
In his annual letter to Berkshire shareholders, Buffett said that buybacks make “good sense” when alternatives, such as buying whole companies or more stocks, appear “unattractive.”
He also expressed confidence in Berkshire’s dozens of operating businesses, such as BNSF Railway Co and insurer Geico Corp, after having gone six years since a major acquisition and letting Berkshire’s cash stake swell to US$146.7 billion.
“Today, internal opportunities deliver far better returns than acquisitions,” Buffett wrote.
Quarterly operating income rose 45 percent to US$7.29 billion, or approximately US$4,931 per Class A share, from US$5.02 billion a year earlier.
Analysts on average expected operating profit of US$4,251 per Class A share, Refinitiv IBES said.
“Overall results looked good,” said Cathy Seifert, an analyst at CFRA Research, which has a “hold” rating for Berkshire. “Many industrial and consumer businesses benefited from the tailwind of an economic recovery.”
She said this year could be tougher for top-line and margin growth because of inflationary pressure, including higher fuel and other input costs, as well as geopolitical pressure.
For the whole of last year, operating income rose 25 percent to US$27.46 billion, topping the previous record US$24.78 billion set in 2018.
Net income more than doubled to US$89.8 billion, boosted by the surging prices of Berkshire’s largest stock investments — Apple Inc, Bank of America Corp and American Express Co — which each rose by more than one-third.
Quarterly operating results benefited from improvement in property and casualty insurance operations, offset by rising accident claims at Geico, as insurance takers drive more.
James Shanahan, an Edward Jones & Co analyst who rates Berkshire “buy,” said that insurers are raising premiums to offset crash losses, adding that higher premiums should be a “pretty strong catalyst” for improvement at Geico this year.
However, Seifert said the deterioration in claims trends in life insurance “won’t turn around in the next couple of quarters. That affects underwriting profitability for reinsurers such as Berkshire.”
BNSF, one of Berkshire’s largest units, boosted a profit of 13 percent, helped by higher shipping volumes of consumer products, industrial products and coal.
Profit also rose 11 percent at Berkshire Hathaway Energy Co, as units including PacifiCorp and MidAmerican Energy Co reported benefiting from higher margins and increased income tax benefits.
Precision Castparts Corp — an aircraft and industrial parts unit that took a US$9.8 billion writedown in 2020, as plane production and air travel plummeted — boosted full-year pretax earnings of 79 percent after eliminating more than 13,000 jobs, although revenue fell 8 percent.
A quick recovery for Precision’s aerospace business is not likely, Berkshire said, citing supply chain disruptions and Boeing Co’s “significant inventory levels” following quality issues with its 737 and 787 planes.
Berkshire’s share price rose 30 percent last year, topping the 29 percent gain in the Standard & Poor’s 500 including dividends, and ending two years of significant underperformance relative to that index.
Berkshire is also outperforming the index so far this year.
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan
CUSTOMERS’ BURDEN: TSMC already has operations in the US and is a foundry, so any tariff increase would mostly affect US customers, not the company, the minister said Taiwanese manufacturers are “not afraid” of US tariffs, but are concerned about being affected more heavily than regional economic competitors Japan and South Korea, Minister of Economic Affairs J.W. Kuo (郭智輝) said. “Taiwan has many advantages that other countries do not have, the most notable of which is its semiconductor ecosystem,” Kuo said. The US “must rely on Taiwan” to boost its microchip manufacturing capacities, Kuo said in an interview ahead of his one-year anniversary in office tomorrow. Taiwan has submitted a position paper under Section 232 of the US Trade Expansion Act to explain the “complementary relationship” between Taiwan and the US
RSS