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NEW YORK (Reuters) – The Berkshire Hathaway conglomerate, led by billionaire Warren Buffett, said Saturday that its quarterly operating profit had nearly doubled, as its insurance business helped prevent hurricanes. and reduce taxes.
This solid result gives more money to Buffett, as the well-known bargain hunter admitted he had a hard time finding the place to use this income and buying up nearly $ 1 billion worth of shares from his own business during the last quarter.
Operating profit in the third quarter doubled to $ 6.88 billion from $ 3.44 billion a year earlier, and higher than the $ 6.11 billion expected by Wall Street, according to IBES data of Refinitiv.
The Company's significant insurance activities were aided by the reduction in the estimated property and casualty insurance liabilities of previous years and the reduction of taxes. The previous year, it included significant losses due to three US hurricanes and an earthquake in Mexico.
Revenues from insurance sales were $ 441 million in the third quarter compared to a loss of $ 1.4 billion for the same period last year.
"This is absolutely one of the biggest quarterly results ever published by any US company," said Bill Smead, managing director of Seattle-based Smead Capital Management, a Berkshire shareholder.
According to Berkshire, net income for the third quarter grew by more than 355% to $ 18.5 billion, although this reflects a new accounting rule requiring it to report unrealized gains on investments with earnings. Buffett said the rule could lead to "crazy and capricious" results and could mislead investors, who, he said, should instead look for operating profits.
Berkshire's effective tax rate for the third quarter was 19.2%, compared to 25.3% for the same period the previous year, as a result of a reduction in the tax rate. Corporate tax that President Donald Trump promulgated in December. The results published by many US companies have been skewed by the impact of the law.
The insurance provides a cash flow that Berkshire can invest worldwide. Floating premiums, or insurance premiums collected prior to claim settlement and contributing to Berkshire's growth financing, were $ 118 billion.
After easing a policy that effectively prevented Buffett from buying back the company's shares at current prices, Berkshire said it bought $ 928 million of its own shares in the third quarter.
Berkshire closed September with $ 103.6 billion in cash, short-term treasury and similar investments.
Buffett's last major acquisition dates back to January 2016. Berkshire paid $ 32.1 billion to Precision Castparts, an aircraft parts manufacturer.
Berkshire's results also improved in the railways, utilities and energy, manufacturing, services and retail sectors, as well as financial products.
Class A shares of Berkshire closed Friday at $ 308,411.01 the stock, generating a total return of 3.6% for the year, slightly ahead of the 3.4% yield of the year. S & P 500 Index. And the company's book value per Class A share was $ 228,712 on September 30, up from $ 217,677 a quarter ago.
Smead said it made sense for Buffett to buy back shares.
"He is the most successful value investor of all time and his company's shares in book value have extreme value in a world where value is incredibly appealing."
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