Berkshire Hathaway reports higher operating profit and resumes stock buybacks
Berkshire Hathaway reported a sharp increase in quarterly operating profit on Saturday, supported by stronger results across its manufacturing, service and retail businesses. The conglomerate also repurchased shares during the period, while gains in its stock portfolio provided an additional boost to net income.
Operating profit for the second quarter rose 16% to $12.98 billion, compared with $11.16 billion during the same period a year earlier.
Core businesses drive earnings growth
The increase in operating earnings reflects improved performance across several of Berkshire Hathaway's major business segments.
Manufacturing, service and retail operations all contributed to the stronger result, highlighting the resilience of the group's underlying businesses beyond its investment portfolio.
Operating profit is closely watched by investors because it excludes many of the fluctuations caused by changes in the value of Berkshire's large holdings of publicly traded shares.
Stock gains lift net income
Berkshire's overall net income also benefited from gains in its equity investments.
The company's holdings in major technology companies, including Apple and Alphabet, recorded double-digit increases in the quarter, contributing to the rise in reported earnings.
Those investment gains can produce significant swings in Berkshire's net income from one period to another, making operating earnings a more useful indicator of the performance of its businesses.
Berkshire buys back its own shares
The company also conducted stock buybacks during the quarter, signalling that Berkshire considered its shares sufficiently attractive to warrant repurchases.
Share buybacks reduce the number of shares outstanding and can increase the portion of the company represented by each remaining share.
The move is closely watched by investors because Berkshire has historically been selective about using its substantial cash resources for acquisitions, investments and repurchases.
Investors focus on underlying performance
The latest results provide a snapshot of Berkshire's performance across both its operating businesses and investment portfolio.
The rise in operating profit points to stronger earnings from the company's diverse collection of businesses, while gains in major stock holdings added another layer of support to the quarterly figures.
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