Warren Buffett’s Berkshire Hathaway Saturday recorded a 23% drop in quarterly operating profit while hovering prices in stock holdings such as Apple enabled the conglomerate to break its old record for full-year earnings.
In his annual note to Berkshire shareholders, Buffett defended Berkshire’s venture into stocks, which comes amid a four-year dryness since its last major purchase that has left Berkshire sitting on $128 billion of cash.
Berkshire did ramp up repurchases of its own stock, buying back approximately $2.2 billion in the quarter. Repurchases totaled $5 billion for the full year.
Nonetheless, while the BNSF railroad and Berkshire Hathaway Energy models showed enhancement, reinsurance operations measured on working results, and the Geico automobile insurer reported “subpar efficiency” as loss claims exceeded premium growth, based on Cathy Seifert, an analyst at CFRA Research.
Q4 operating revenue dropped to $4.42 billion, or roughly $2,720 per Class A share, from $5.72 billion, i.e., around $3,484 a share.
Berkshire didn’t write down its 26.6% stake in Kraft Heinz, which is struggling to recover from years of cost-slicing amid changing consumer tastes. However, its market value is well under the $13.8 billion carrying cost on Berkshire’s balance sheet.
Net income, reflecting stock gains, totaled $29.16 billion, in contrast with a net loss of $25.39 billion a year ago.
For all of 2019, net revenue totaled $81.42 billion, hitting the record $44.94 billion for 2017, when Berkshire profited from a lower U.S. corporate tax rate.