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Coronavirus punishes Warren Buffett as Berkshire Hathaway takes big writedown

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(Reuters) – Berkshire Hathaway Inc on Saturday announced a $9.8 billion writedown and 10,000 job losses at its Precision Castparts aircraft parts unit, as the coronavirus pandemic caused widespread pain at Warren Buffett’s conglomerate.

Despite the writedown, Berkshire said second-quarter net income surged 87% because of gains in stock investments such as Apple Inc as markets rebounded.

Operating profit fell 10%, cushioned by a temporary bump at the Geico auto insurer, as the pandemic caused “relatively minor to severe” damage to most of Berkshire’s more than 90 operating businesses.

“The writedown was prudent,” said Cathy Seifert, an equity analyst at CFRA Research. “It’s a recognition of what the market has long believed, that the purchase price was rich, and the integration not as smooth as many would have hoped.”

Berkshire, which paid $32.1 billion for Precision in 2016 in its largest acquisition, and which Buffett at the time called a steep price, said COVID-19 caused airlines to slash plane orders, significantly curbing demand for Precision’s products.

Buffett himself soured on airlines during the quarter, selling $6 billion of their stock and telling shareholders on May 2 the industry’s future had become “much less clear to me.”

Berkshire said Precision, which also makes industrial parts, saw revenue fall by one-third and plans an “aggressive restructuring” to shrink operations. Precision ended 2019 with 33,417 employees, and has shed 30% of its workforce.

During the quarter, Buffett, who turns 90 on Aug. 30, also took advantage of Berkshire’s underperforming shares by repurchasing $5.1 billion of stock, even as the pandemic reduced other companies’ ability to buy back their own shares.

Berkshire’s stock has significantly underperformed broader markets since the end of 2018, and Seifert said investors should welcome the buybacks.

“Berkshire tends to go against the grain, and when so many companies suspended buybacks, Berkshire did the opposite,” she said. “The market should react positively, because it shows Berkshire is confident in its prospects.”

Those repurchases confirmed Berkshire’s hint in a July 8 regulatory filing it had become more aggressive with buybacks after loosening its buyback policy in 2018.

Pandemic damage

Berkshire businesses suffering from the pandemic also include the BNSF railroad, which saw lower shipping volumes, and retailers including See’s candies that temporarily closed stores.

Companies in which Berkshire recently made large investments have also been struggling.

Berkshire recorded a $513 million loss on its 26.6% stake in Kraft Heinz Co (KHC.O), after the food company took several writedowns including for Maxwell House and Oscar Mayer.

Meanwhile, Occidental Petroleum Corp, where Berkshire invested $10 billion last August, has also pummeled by sinking oil prices.

Berkshire’s overall quarterly net income rose to $26.3 billion, or $16,314 per Class A share, from $14.07 billion, or $8,608 per share, a year earlier. That followed a $49.75 billion first-quarter loss.

An accounting rule requires Berkshire to report unrealized stock gains and losses with net results, causing huge swings that Buffett considers meaningless.

Second-quarter operating profit fell to $5.53 billion, or about $3,463 per Class A share, from $6.14 billion, or $3,757 per share, a year earlier.

Revenue fell 11% to $56.8 billion, despite gains in some businesses including Duracell batteries, which rose 16%.

Geico’s pretax underwriting profit increased fivefold to $2.06 billion because people drove less, resulting in significantly fewer accident claims.

But Berkshire said Geico could suffer underwriting losses for the rest of the year, as it awards drivers $2.5 billion of credits on auto and motorcycle policy renewals.

Berkshire ended June with a record $146.6 billion of cash and equivalents, and bought just $797 million of equities in the quarter.

Buffett has since deployed some cash, agreeing to buy some Dominion Energy gas assets for $4 billion and adding more than $2 billion of Bank of America Corp stock.

Reporting and photo: Reuters

Business

Atmosphere Core expands in South Asia with Atmosphere Living ultra-luxury residences

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Atmosphere Core, a globally renowned name in hospitality, has announced the launch of Atmosphere Living as part of its continued expansion in South Asia. Headquartered in India, this new company will offer branded ultra-luxury residences with customised end-to-end amenities and indulgences, including coffee lounges, wine cellars, private transport, and bespoke concierge services.

The global branded residences market has experienced a remarkable 150 percent growth over the past decade, and projections indicate a surge in demand. With the real estate veteran Sandeep Ahuja at the helm as Managing Director, Atmosphere Living is strategically positioned to capitaliSe on this demand.

Atmosphere Living will focus on a conscious design philosophy. All properties will be built in harmony with the environment and will incorporate features such as smart recycling, efficient waste and water management, and green energy solutions.

Sharing his insights on the launch, Salil Panigrahi, Managing Director, Atmosphere Core, said, “Atmosphere Living will bring a distinctive offering to India, and is a brand to watch out for. It will combine Ahuja’s decades of experience, knowledge, and industry network in real estate with Atmosphere’s hospitality expertise, introducing unparalleled serviced residences in India.”

Positioned in major metropolitan areas, established second-home destinations, and undiscovered scenic locales nationwide, these projects will also present lucrative investment opportunities. Elite homeowners will have the option to lease their residences back to Atmosphere Living, allowing them to be rented out for income generation.

Sandeep Ahuja, Managing Director, Atmosphere Living, said, “There is currently a gap in the Indian realty landscape for ultra-indulgent serviced homes catering to affluent consumers. We aim to bridge this gap by curating serviced homes that offer indulgences such as entering homes using smart key cards, 24/7 butler services, fine dining, and co-working spaces, among others. Our ultimate desire is to enable our customers to experience a life of true luxury and exclusivity.”

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A night of celestial wonders, luxury, and cosmic inspiration at Anantara Kihavah SKY Observatory by British astronaut Tim Peake

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Anantara Kihavah Maldives Villas celebrated a historic  milestone with the exclusive visit of the renowned British astronaut, Tim Peake. On the evening of November 2, Astronaut Peake hosted an exclusive space talk at SKY Observatory, the finest  overwater observatory in the Indian Ocean, housing the most powerful telescope in the Maldives. 

Perched gracefully over the pristine Maldivian waters, SKY Observatory provided an idyllic setting for  this extraordinary event, complemented by a stunning sunset. The exclusive gathering attracted a full  house of eager guests to a delightful evening that seamlessly blended science, luxury, and natural  beauty. 

The evening commenced with a lovely cocktail reception, where guests were serenaded by the soulful  tunes of a live saxophone band. Attendees savoured exquisite cocktails and canapés as they eagerly  awaited Tim Peake’s presentation. 

Tim Peake’s talk unveiled his personal journey, where he shared his path to becoming an astronaut  and narrated the rigorous training that astronauts undergo. He provided insights into life in space, the  daily challenges faced by astronauts, and the awe-inspiring experiences he encountered during his 

historic mission. He also offered a glimpse into his exciting future projects, leaving the audience both  inspired and spellbound. 

Following Tim’s presentation, an interactive Q&A session allowed guests to engage directly with the  British astronaut. The audience posed thoughtful questions, deepening their understanding of  astronauts’ unique experiences and the intricacies of space exploration. 

The event was further enriched by the presence of the resort’s three SKY gurus, Hammadh Rasheed,  Zunnoon Ahmed, and Ali Arushal, who conducted a stargazing session for the guests afterward. 

The success of the event was evident in the overwhelmingly positive feedback from attendees, who  left with a deeper appreciation for space exploration and a memorable evening to cherish. 

The evening marked a significant moment in Anantara Kihavah’s history, showcasing the resort’s  commitment to offering unique and memorable experiences for its guests. The presence of Tim  Peake, a celebrated astronaut and highly accomplished author, added an extraordinary dimension to  the resort’s already spectacular offerings. 

Tim Peake is a renowned British astronaut who made history as the first official British astronaut to  visit the International Space Station (ISS) and conduct a spacewalk during his six-month mission. He  also achieved the remarkable feat of running the London Marathon from space. Beyond his  extraordinary space endeavours, Tim is also a bestselling author with his most recent book Space: A thrilling human history published earlier this month. 

An astronomer’s paradise, Baa Atoll in the Maldives, is one of the best places on earth to enjoy  stargazing due to its proximity to the equator. Anantara Kihavah Maldives Villas promises a voyage of  discovery on a private Indian Ocean Island, with Sky—an overwater observatory and luxury cocktail  bar—providing guests a chance to sip champagne under the stars and explore the Universe.

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Visit Maldives website adds atolls segment to showcase diverse regions

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Maldives Marketing and Public Relations Corporation’s (MMPRC/ Visit Maldives) has added a new segment to the official Visit Maldives Website specified for atolls showcasing the diversity of the Maldives.

The segment, now live at atolls.visitmaldives.com provides in depth information regarding the different regions of the Maldives, divided by atolls, to refine the traveller’s experience, commencing with an in-depth exploration of Addu Atoll and Fuvahmulah Atoll.

With 26 atolls, the Maldives offers a wide array of unique accommodations and awe-inspiring travel experiences, and this informative section of our website will serve as a gateway to discover the hidden treasures unique to each area. This falls under MMPRC’s initiatives to encourage tourism growth in all regions of the Maldives, broadening exposure to the diverse tourism products available in the Maldives.

The goal is to elevate Visit Maldives’ digital marketing landscape by showcasing the Maldives as more than just a honeymoon destination with various accommodation options. This initiative is driven by a desire to increase awareness about the distinctive offerings within each of the Maldives’ atolls. It aims to positively shape their perception of the Sunny Side of Life brand by curating engaging content that highlights the unique features of the atolls and diverse experiences available in the islands.

Additionally, the initiative will target the affordable luxury market to promote the Maldives as the most appealing option for short holidays and weekend getaways under a unified Maldives brand umbrella.

MMPRC aims to continue exploring other atolls in the Maldives as well, encouraging growth and tourism development in all regions of the Maldives, building on the foundation we have created to promote the destination beyond the traditional paradigms of sun, sand, and sea.

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