Buffett scores on US tax reform

WARREN Buffett’s Berkshire Hathaway on Saturday reported a record quarterly and annual profit, fuelled by a big cut in the US corporate income tax rate championed by President Donald Trump.

Fourth-quarter net income increased roughly fivefold to $32.55 billion (R375.12bn), or $19 790 per Class A share, from $6.29bn, or $3 823 per share, a year earlier.

Quarterly operating profit for the Omaha, Nebraska-based conglomerate, fell 24 percent to $3.34bn from $4.38bn.

Berkshire attributed roughly $29.11bn of its net income to the reduction of the corporate tax rate, to 21 percent from 35 percent, that Trump signed into law in December. Many US companies’ reported results have been skewed by the law’s impact.

“Buffett has been quick to say that he thinks that the tax policy changes were going to help Berkshire and be positive overall,” said Bill Smead, chief executive of Smead Capital Management in Seattle, a Berkshire shareholder. “It is a bit ironic his candidate would not have any interest in this whatsoever.”

Buffett supported Hillary Clinton, a Democrat, in the 2016 US presidential election. “Buffett doesn’t dwell very long on the politics,” Smead said.

Book value per Class A share, which reflects assets minus liabilities and which Buffett considers a good yardstick for Berkshire’s intrinsic worth, also benefited from the tax cut, rising 13 percent in the fourth quarter to $211 750. – Reuters