As a result of improved results at Berkshire Hathaway’s railroad, utilities, and energy companies, Berkshire Hathaway’s second-quarter net earnings rose 7%.
The company earned $28.1 billion in net earnings or $18,488 per share of Class A equivalent, it reported for the second quarter compared with $26.3 billion, or $16,314 in the prior year.
In operating earnings, excluding some investment results, the company earned $6.7 billion in 2017 compared with $5.5 billion the year before. In the railroad, utilities, and energy divisions of the company, profits increased, while profits dropped in the vast insurance division.
Most of the company’s manufacturing, service and retailing businesses reported significant declines in earnings due to the COVID-19 outbreak last year.
However, their businesses have recovered and, in some cases, they have now exceeded pre-pandemic levels in the second half of 2020 and 2021.
In addition to operating large insurance companies, a railroad, utilities, industrial manufacturers, and even auto dealerships are part of the conglomerate. The company also holds substantial stock market investments.
Berkshire Hathaway’s earnings have been reflecting recent stock market performance, while its operating earnings have more accurately reflected the firm’s large business operations.
Despite a recovering economy in the U.S the company’s earnings report comes after a year of the Coronavirus pandemic. Likewise, the stock market has recovered, with the S&P 500 recording record highs in the second quarter. Since the start of the year, the index has increased more than 14%.
Mr. Buffett’s firm, despite a reputation for either buying companies outright or lending directly during these tough markets, kept a low profile during much of the pandemic.
A deal worth $9.7 billion, including debt, was Berkshire’s biggest deal last year when it agreed to buy Dominion Energy’s midstream energy business.
According to Mr. Buffett, private equity funds and special-purpose acquisition companies are driving valuations in both public and private companies above their appropriate levels.
These groups invest with other people’s money, have time limits, and invest using other people’s money. This raises prices.
The buyback of Berkshire stock has been one of Mr. Buffett’s major undertakings. Berkshire bought back almost $25 billion in shares last year after refusing to do so for much of the past few decades.
According to Buffett, over-the-top buybacks increase shareholders’ intrinsic value while still allowing Berkshire to pursue other opportunities while keeping plenty of funds on hand.
For the first six months of 2021, Berkshire has spent $12.6 billion repurchasing its shares. The company said in a statement on Saturday that it spent $6 billion to buy shares in the second quarter.
Shares of Class A closed Friday at $430,160, an increase of 2.1%. In the past year, the shares have increased by over 20%.
With plenty of cash on hand, Mr. Buffett, 90, has earned the nickname “the Oracle of Omaha” for his shrewd investments. At the end of Q2, Berkshire held $144.1 billion in cash, down from about $145.4 billion at the end of Q1.