TSX runs higher on rate cut expectations
Investing.com - Berkshire Hathaway has posted a $3.76 billion write-down on its stake in consumer food company Kraft Heinz (NASDAQ:KHC), while a fall in insurance underwriting premiums also dented second-quarter returns from Warren Buffett’s sprawling conglomerate.
Class B shares of Berkshire Hathaway (NYSE:BRKa) edged slightly lower in premarket U.S. trading on Monday. The results were first released over the weekend.
Along with tepid gains from common stocks such as American Express (NYSE:AXP) and Apple (NASDAQ:AAPL), the Kraft-Heinz write-down and premiums drop contributed to a steep decline in overall net profit to $12.37 billion from $30.35 billion in the same period a year ago. Revenue also fell by 1.2% to $92.5 bilion.
Still, Berkshire was boosted by an almost 20% jump in operating income at its BNSF unit that stemmed in large part from cost-cutting and lower fuel expenses.
Berkshire’s cash pile at the end of the second quarter stood at $344 billion, down slightly from $348 billion in the previous three-month period but near an all-time record high.
"[T]he Berkshire story remains the same as before, with mixed insurance underwriting performance [...], continued improvement at BNSF [...], slowing growth in investment income [...], and a giant pile of cash," analysts at Vital Knowledge said in a note.
The earnings come as Berkshire looks ahead to the upcoming departure of the 94-year old Buffett. He will step down at the end of 2025 from his long-time post at the helm of a business that has turned him into a household name in financial markets, with current Vice Chair Greg Abel set to succeed him.
In a note, analysts at Keefe, Bruyette & Woods said Berkshire is facing an "emerging management succession risk," but said this will likely impact "investors’ view" of the company "more than it will actual operations."