Apple fuels Berkshire Hathaway's third-quarter profit

Warren Buffett's conglomerate repurchases a record $9.3bn of its underperforming stock in Q3 as operating profit falls 32%

Warren Buffett's Berkshire Hathaway repurchased a record $9.3 billion of its underperforming stock in the third quarter. Reuters

Warren Buffett's Berkshire Hathaway on Saturday posted a lower operating profit as the Covid-19 pandemic weighed on some of its businesses, although gains in stocks such as Apple fuelled a big quarterly net profit.

The conglomerate disclosed it repurchased a record $9.3 billion of its underperforming stock in the quarter, and $16bn so far this year, as Mr Buffett remained unable to find huge acquisitions to spur growth.

Berkshire also said that while some businesses are rebounding from the pandemic's depth, the pain persists at its Precision Castparts aircraft and industrial parts unit, which is expecting thousands of additional job losses.

Third-quarter operating profit fell 32 per cent to $5.48bn, or about $3,488 per Class A share, from $8.07bn a year earlier.

Meanwhile, net income rose 82 per cent to $30.14bn, or $18,994 per Class A share, from $16.52bn, or $10,119 per share, a year earlier.

Net results included $24.77bn of gains from investments such as Apple, which rose 27 per cent in the quarter and at $111.7bn is by far Berkshire's biggest stock holding.

It appeared nonetheless that Berkshire may have sold some Apple stock in the quarter because the stake should have been a few billion dollars higher, based on previously disclosed stakes, if none of it were sold.

Net results are volatile because an accounting rule requires Berkshire to report gains and losses on its common stock investments even if it does no buying and selling.

The company had posted a $26.3bn second-quarter profit, but lost $49.75bn in the first quarter. It ended September with $145.7bn of cash and equivalents.

Berkshire said most of its operating businesses have been negatively affected by the pandemic, although in the third quarter several experienced significant increases in revenue and earnings from the second quarter.

Year-over-year profit fell just 8 per cent at the BNSF railroad despite lower shipping volumes.

But at Precision, where Berkshire had taken a $9.8bn writedown in August, quarterly pretax profit fell 80 per cent, and by year end, it expects to shed 40 per cent of its workforce.

That equates to roughly 13,400 jobs, or 3,400 more than Berkshire previously disclosed had been lost.