Warren Buffett's Berkshire Hathaway reports near-$50bn loss as value of investments drops

The company still made an operating profit of $5.87bn and sits on a $137bn cash pile

Berkshire Hathaway reversed a profit of $21.66bn in the first quarter of last year to a loss of $49.7bn as it took a hit on the value of its investments as equity markets fell. AP Photo

Warren Buffett’s company reported a nearly $50 billion (Dh183.6bn) 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 Hathaway said it lost $49.7bn, or $30,653 per Class A share, during the first quarter. That's down from last year's profit of $21.66bn, or $13,209 per Class A share.

The biggest factor in the slump was a $54.5bn loss on the value of Berkshire's investment portfolio as the stock market declined sharply after the coronavirus outbreak began. The year before, Berkshire's investments added $15.5bn to the company's profits.

Mr Buffett has long said Berkshire’s operating earnings offer a better view of quarterly performance because they exclude investments and derivatives, which can vary widely. 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.

Analysts surveyed by FactSet expected operating earnings per Class A share of $3,796.90 on average.

The company's revenue grew 1 percent to $61.27bn.

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.

Later today, Mr Buffett plans to lead an abbreviated online version of Berkshire's annual meeting without any of the roughly 40,000 shareholders who typically attend. The company shifted to an online meeting and cancelled all of the events surrounding the event because of the coronavirus outbreak.

Berkshire Hathaway owns more than 90 companies, including the BNSF railroad and insurance, utility, furniture and jewellery businesses. The company also has major investments in companies such as Apple, American Express, Coca-Cola and Bank of America.