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- Warren Buffett’s Berkshire Hathaway posted a 9% drop in operating earnings in 2020.
- The billionaire investor’s company took a $10 billion writedown on Precision Castparts.
- Berkshire repurchased about $25 billion of its stock last year.
- Visit the Business section of Insider for more stories.
Warren Buffett’s Berkshire Hathaway suffered a 9% decline in operating earnings last year as the COVID-19 pandemic caused widescale disruption to its business, its fourth-quarter earnings revealed on Saturday.
The famed investor’s conglomerate owns scores of businesses including Geico, See’s Candies, and the Burlington Northern railroad. It also holds multibillion-dollar stakes in public companies such as Apple, Bank of America, and Coca-Cola.
Berkshire’s revenues only slid 4% last year, but its investment gains slumped by more than 40%, slashing its net earnings to about $43 billion.
The company generated slimmer profits from its insurance division’s investments, its railroads, and its manufacturing, service, and retail businesses. However, it earned more income from utilities and energy, as well as insurance underwriting.
Berkshire boasted $138 billion in cash and short-term investments at the end of December, underscoring its failure to make the “elephant-sized” acquisition that Buffett has been hunting for several years now.
Precision Castparts – Berkshire’s last big acquisition, bought for $37 billion in 2016 – posted a 29% slump in revenue and a 65% plunge in pre-tax earnings in 2020.
Buffett wrote down the value of the manufacturing subsidiary by $10 billion, citing question marks around the timing and scale of the recovery in the commercial-airline and aerospace industries as vaccines are rolled out globally.
The investor admitted Berkshire paid too much for the business in his annual letter on Saturday, calling the deal terms a “big” error on his part.
Buffett’s company spent about $7.8 billion on stocks last quarter, which included Chevron, Verizon, and Marsh & McLennan. It sold a little over $10 billion worth of stock, as it cashed out some of its massive Apple stake and slashed its positions in JPMorgan and Wells Fargo.
Berkshire’s investment moves last quarter mean it spent about $30 billion in total on stocks last year. However, it sold about $39 billion worth, making it a net seller to the tune of roughly $9 billion in 2020.
Buffett’s company repurchased the equivalent of 81,000 of its “A” shares – or nearly 5% of its total shares outstanding – for $24.7 billion in 2020. That included $8.8 billion in buybacks last quarter alone, just shy of the record $9 billion worth in the third quarter.
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