Despite the golden touch of its chief executive, legendary investor Warren Buffett, Berkshire Hathaway has not been spared from the impact of the coronavirus-induced economic downturn.
In a regulatory filing dated May 2, Berkshire reveals it lost nearly $49.75 billion in the first quarter of this year, the biggest in its history. The loss is attributed to the massive drop in the value of the company’s investments.
Berkshire, which owns more than 90 businesses including GEICO, Duracell and Dairy Queen, says that before mid-March, many of its subsidiaries were seeing better earnings and revenues compared to last year, but things changed because of Covid-19.
While Berkshire continues to operate businesses that are deemed essential, including those that provide transportation, utilities and energy, insurance, and distribution services, the company says these slowed down in April.
Its retail, manufacturing and service businesses are also heavily impacted as stores, restaurants and entertainment venues where people gather have been shuttered in order to curb the spread of infection.
To protect its stakes, Berkshire says it decided to furlough employees, slash wages and salaries, as well as reduce capital spending plans.
“While we believe that these necessary actions are temporary, we cannot reliably predict when business activities at our numerous and diverse operations will normalize. We also cannot predict how these events will alter the future consumption patterns of consumers and businesses we serve.”
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