August 8, 2020

Berkshire Hathaway profits surge despite near-$10bn writedown

Warren Buffett’s Berkshire Hathaway reported a surge in profits in the second quarter as the value of its stock portfolio rebounded, offsetting a near $10bn writedown on its largest manufacturing business and a slide in operating earnings.

The industrial conglomerate, which owns insurer Geico, the BNSF rail company and ice cream purveyor Dairy Queen, said net income rose 87 per cent from the year before to $26.3bn for the three months to the end of June.

The gain was propelled by a broad market rally that helped lift the shares of iPhone maker Apple, its largest stock investment, 43 per cent in the second quarter.

But the earnings of the dozens of companies Berkshire owns outright fell 10 per cent from the previous year to $5.5bn, which included large declines at Precision Castparts, the aerospace parts supplier that Berkshire acquired in 2016.

Berkshire said it would take a $9.8bn writedown on the unit, reflecting the deep contraction in air travel since the onset of the coronavirus pandemic. Precision Castparts embarked on what Berkshire characterised as an “aggressive restructuring” to cut costs in the first half of the year as demand for aircraft has fallen. The group has reduced its workforce

Trump advisors urge delisting of U.S.-listed Chinese firms that fail to meet audit standards

U.S. Secretary of the Treasury Steven Mnuchin testifies with Jovita Carranza, Administrator U.S. Small Business Administration during the Senate Small Business and Entrepreneurship Hearings to examine implementation of Title I of the CARES Act on Capitol Hill on June 10, 2020 in Washington, DC.

Kevin Dietsch | Getty Images

Trump administration officials have urged the president to delist Chinese companies that trade on U.S. exchanges and fail to meet U.S. auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.

The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect U.S. investors from Chinese companies whose audit documents have long been kept from U.S. regulators.

It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of U.S. capital markets but do not comply with U.S. rules faced by American rivals.

“We are simply leveling the playing field, holding Chinese firms listed in the U.S. to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.

The U.S. Senate