WASHINGTON: Hard-hit by the market rout surrounding the coronavirus pandemic, Berkshire Hathaway, the holding company of Warren Buffett, has reported first-quarter net losses of nearly US$50 billion (RM215 billion), it reported on Saturday.
The company, based in Omaha, Nebraska, called the setback "temporary" but said it could not reliably predict when its many businesses would return to normal or when consumers would resume their former buying habits.
Buffett is considered one of the savviest investors anywhere. His fortune of US$72 billion is the fourth-largest in the world, according to Forbes, and in normal years, the company's annual gathering in Omaha is a high-point of the calendar for investors, a "Woodstock for capitalists."
But the devastating economic impact of the pandemic has hit hard at Berkshire Hathaway's wide range of investments, and the need for social distancing forced it to hold the annual meeting online.
Buffett, in a statement, played down the bleak-looking net figure. He said a better measure of the company's performance was its operating earnings, which exclude investments and are less subject to sharp fluctuations.
By that measure, Berkshire Hathaway saw growth to US$5.9 billion from US$5.55 billion a year earlier.
The brutal drop in the net – to a loss of US$49.75 billion from a profit last year of US$21.7 billion – resulted primarily from the virus-related decline in value of its broad investment portfolio, which ranges from energy to transport to insurance and technology.
The annual meeting often has an almost carnival atmosphere, as thousands of fans and investors flock to Nebraska to hear from the celebrated "Oracle of Omaha." Buffett, famous for his relatively sedate lifestyle, turns 90 on Aug 30.
In documents filed Saturday, Berkshire noted that until mid-March many of its companies were posting "comparative revenue and earnings increases" over the same 2019 period.
Many of its companies – including in rail transport, energy production and some manufacturing and service businesses – are deemed essential and are able to continue working amid the far-reaching confinement orders.
But their turnover slowed considerably in April, the company statement said.
Buffet said he's confident the US economy will bounce back from its pummelling by the coronavirus pandemic because "American magic has always prevailed."
Buffett also announced on Saturday that his company had sold all its stakes in four major US airlines last month, as the pandemic clobbered the travel industry.
"It turns out I was wrong," he said of his acquisitions of 10% stakes in American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
Berkshire Hathaway had paid US$7 billion to US$8 billion, and "we did not take out anything like that," he said.
Between the purchases that took place over months, and the sale, "the airlines business I think changed in a very major way" and could no longer meet Berkshire criteria for profitability, he said.
"We've faced great problems in the past, haven't faced this exact problem – in fact we haven't really faced anything that quite resembles this problem," Buffett said in a lengthy speech on the country's economic history.
"But we faced tougher problems, and the American miracles, American magic has always prevailed and it will do so again."
Buffett addressed his shareholders in a livestream flanked only by Gregory Abel, who is in charge of Berkshire's non-insurance operations. His business partner for six decades, 96-year-old Charlie Munger, did not appear. – AFP
Buffett said his company sold all its stakes in four major US airlines last month. – AFPPIX
source https://www.thesundaily.my/business/buffett-s-berkshire-hathaway-reports-us-4975-billion-quarterly-loss-JB2366856
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