Warren Buffett’s Berkshire Hathaway Inc. on Saturday mentioned fourth-quarter revenue swelled, boosted by positive factors in a lot of its companies and customary inventory investments resembling Apple Inc., and mentioned annual earnings reached a report excessive.
Berkshire additionally signaled renewed confidence in its personal inventory, repurchasing $6.9 billion within the quarter, and boosting complete buybacks in 2021 to a report $27 billion.
However the tempo of buybacks has slowed, with Berkshire, whose share value is simply 2% under its report excessive, repurchasing simply $1.2 billion of inventory in 2022.
In his annual letter to Berkshire shareholders, Buffett mentioned buybacks make “good sense” when alternate options resembling shopping for entire firms or extra shares seem “unattractive.”
He additionally expressed confidence in Berkshire’s dozens of working companies such because the BNSF railroad and Geico auto insurer, after having gone six years since a significant acquisition and letting Berkshire’s money stake swell to $146.7 billion.
“At the moment, inside alternatives ship much better returns than acquisitions,” Buffett wrote.
Quarterly working revenue rose 45% to $7.29 billion, or roughly $4,931 per Class A share, from $5.02 billion a 12 months earlier.
Analysts on common anticipated working revenue of $4,251 per Class A share, in accordance with Refinitiv I/B/E/S.
“Total outcomes regarded good,” mentioned Cathy Seifert, an analyst at CFRA Analysis with a “maintain” score for Berkshire. Many industrial and shopper companies benefited from the tailwind of an financial restoration, she mentioned.
Ms. Seifert mentioned 2022 might be more durable for top-line and margin progress due to inflationary strain, together with greater gas and different enter prices, and geopolitical strain.
For all of 2021, working revenue rose 25% to $27.46 billion, topping the earlier report $24.78 billion set in 2018.
Web revenue greater than doubled to $89.8 billion, aided by the inventory costs of Berkshire’s largest inventory investments — Apple, Financial institution of America Corp. and American Specific Co. — which every rose by greater than one-third.
Mr. Buffett considers internet revenue a deceptive efficiency measure as a result of it contains positive factors and losses from inventory holdings, no matter what Berkshire buys or sells.
Quarterly working outcomes benefited from enchancment in property/casualty insurance coverage operations, offset by rising accident claims at Geico as folks drove extra.
James Shanahan, an Edward Jones & Co analyst who charges Berkshire “purchase,” mentioned insurers are elevating premiums to offset crash losses, and that greater premiums ought to be a “fairly robust catalyst” for enchancment at Geico in 2022.
Ms. Seifert, nevertheless, mentioned the deterioration in claims tendencies in life insurance coverage “will not flip round within the subsequent couple of quarters. That impacts underwriting profitability for reinsurers resembling Berkshire.”
The BNSF railroad, one in all Berkshire’s largest items, boosted revenue 13%, helped by greater delivery volumes of shopper merchandise, industrial merchandise and coal.
Revenue additionally rose 11% at Berkshire Hathaway Power, as items together with PacifiCorp and MidAmerican Power reported benefiting from greater margins and elevated revenue tax advantages.
Precision Castparts, an plane and industrial elements unit that took a $9.8 billion write-down in 2020 as aircraft manufacturing and air journey plummeted, boosted full-year pretax earnings 79% after eliminating greater than 13,000 jobs, although income fell 8%.
A fast restoration for Precision’s aerospace enterprise is not probably, Berkshire mentioned, citing provide chain disruptions and Boeing Co.’s “vital stock ranges” following high quality points with its 737 and 787 planes.
Berkshire’s share value rose 30% in 2021, topping the 29% acquire within the Commonplace & Poor’s 500 together with dividends, and ending two years of great underperformance relative to that index. Additionally it is outperforming in 2022.