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Home / Business / Berkshire Hathaway Q1 earnings are growing, but Kraft Heinz is missing

Berkshire Hathaway Q1 earnings are growing, but Kraft Heinz is missing



<p class = "canvas-atomic text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Berkshire Hathaway ( BRK -A & nbsp; BRK-B ) reported & nbsp; Q1 results & nbsp; that appear to be slightly stronger than expected by analysts. "Berkshire Hathaway (BRK -A, BRK-B) reported results in Q1
which appear to be slightly stronger than analysts expected.

Operating profit in Q1 increased to $ 5.55 billion from $ 5.29 billion a year ago. This was higher than the $ 5.29 billion expected by analysts. (Note, operating profit does not include quarterly gains or losses from Berkshire's investments and derivative portfolios.)

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt) – sm" type = "text" content = "It is very important to note that Berkshire's results do not include the impact of Kraft Heinzs ( KHC ) last woes. Berkshire has a significant stake in the company." data-reactid = "17"> It is very important to note that Berkshire's results do not include the effect of Kraft Heinz's (KHC) latest woes. Berkshire has a significant share in the company.

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " [ [19659003] Click here to cover 2019 Berkshire Hathaway General Assembly .] "data-reactid =" 18 "> [19659003] Click here to cover 2019 Berkshire Hathaway Stock Assembly .]

"From May 3, 2019, Kraft Heinz has not filed his 2018 Form 10-K with the Securities and Exchange Commission. In addition, Kraft Heinz has not made his accounts for The first quarter of 2019 available to Berkshire, therefore, Berkshire does not have the necessary financial information to determine its share of Kraft Heinz's revenue for the first quarter of 2019. The result is that Berkshire's first operating revenues in 2019 exclude such amounts. "

& # 39; I will pay attention to Kraft Heinz as soon as they give their financial results.

"Other operating revenues in the first quarter of 2018 included $ 234 million related to Berkshire's investment in Kraft Heinz," they noted.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "News comes hours before & nbsp; 2019 Berkshire Hathaway General Assembly . "Data-reactid =" 22 "> News arrives hours before the Berkshire Hathaway General Assembly in 2019.

<h2 class =" canvas-atom clay text Mb (1.0em) Mb (0) – sm Mt) "sm" type = "text" content = " The" meaningless "and" misleading "part of Berkshire's results " data-reactid = "23"> The "meaningless" and "Misleading" "Part of Berkshire's Results

The net result, which has become very volatile due to a change in accounting, came in at $ 21.7 billion or $ 13.199 per share and $ 8.81 per share. This compared to a loss of $ 1.1 billion a year ago. In the period, Berkshire had an unrealized gain of $ 15.1 billion on the equity portfolio.

<p class = "canvas-atom canvas text Mb (1.0em) Mb (0) – Sm mt (0.8em) – The amount of investment gains / losses in a given quarter is usually meaningless and provides figures for net income per share that can Be extremely misleading for investors who have little or no knowledge of accounting rules "Berkshire Management noted. Emphasis on their. "Data-reactid =" 25 ">" The amount of investment gain / loss in a given quarter is usually meaningless and provides figures for net income per share that can be extremely misleading for investors with little or no knowledge on accounting rules "Berkshire management noted. Sorry their.

Warren Buffett, Chairman and CEO of Berkshire Hathaway Inc., visits New York Stock Exchange in New York, USA, Friday, September 30, 2011. (Scott Eells / Bloomberg via Getty Images)

As mentioned above, Berkshire Hathaway's bottom line has become much more volatile lately, not because the business model changed. It is rather because of accounting.

A recent change in accounting principles (GAAP) from the Financial Accounting Standards Board (FASB) requires companies to account for short-term fluctuations in their equity investments in the quarterly result. These are known as unrealized gains and losses – unrealized because these are losses of paper, not actual losses (or realized gains and losses) arising from the sale of these securities.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "" This requirement will produce someone really wants and Shuffle swings in our sustainable bottom line, "Buffett said. 2017 Letter to Shareholders ." Berkshire owns $ 170 billion of traded shares (not including our Kraft Heinz shares), and the value of these stocks can easily fluctuate. $ 10 billion or more within quarterly reporting period. Including gyrations of the size in reported net income, the sump will really swamp the key figures that describe our operational performance. & Nbsp; Berkshire's "bottom line" will be useless for analytical purposes. "" data-response time = "39"> "That requirement will produce some really wild and fluffy swings in our GAAP box," Buffett said in the 2017 letter to the shareholders. "Berkshire owns $ 170 billion of traded shares (not including our Kraft Heinz shares), and the value of these stocks can easily fluctuate by $ 10 billion or more within the quarterly reporting period. Including gyrations of that size in reported net revenues will swamp the truly important the figures describing our performance. For analytical purposes, Berkshire's "bottom-line" will be useless. "

<p class =" canvas-atom canvas text Mb (1.0em) Mb (0) – sm Mt (0.8 em) [N] nor did Berkshire's deputy, Charlie Munger, nor I think the rule makes sense, "Buffett wrote on the first page of his 2018 letter to the shareholders . "Rather, we've both consistently thought that in Berkshire, this mark-to-market change would produce what I described as" wild and whimsical swings in our bottom line. "" Data Reaction = "40"> "[N] either Berkshire's Deputy Chairman, Charlie Munger, or I think the rule is reasonable," Buffett wrote on the first page of the 2018 letter to the shareholders. "We also thought consistently that in Berkshire, this mark-to-market change would produce what I described as" wild and whimsical swings in our bottom line. ""

So what are investors doing when they get the quarterly results for a company that has many capital investments?

"Our Advice? Focus on Operating Profits, A Few Attention to Gains or Loss of Some Selection."

2019 Berkshire Hathaway General Assembly

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " Sam Ro is the managing editor at Yahoo Finance Follow him on Twitter : @SamRo "data-reactid =" 57 "> Sam Ro is the managing editor of Yahoo Finance. Follow him on Twitter : @SamRo

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