03/11/2025

BIZ & FINANCE MONDAY | NOV 3, 2025

17

Berkshire still cautious, cash pile hits record US$381.7b

US retailers left short-changed as penny production ends WASHINGTON: Now that the United States no longer makes pennies, there is a scramble among gas stations, fast-food chains and big-box stores to adjust prices and round cash transactions, and it could potentially eat into their profits. Pennies are drying up faster than retailers anticipated following President Donald Trump’s decision earlier this year to halt production of the one-cent coin. Retail groups recently told Reuters that they are frustrated by the lack of guidance from the Trump administration and lawmakers, forcing them to round down to avoid angering customers and violating laws in some states – potentially costing high-volume businesses significant money. The National Retail Federation said the dearth of pennies has hit retailers in urban and rural areas, with no clear geographic pattern. Members of some state restaurant asso ciations have voiced concerns about penny shortages. “Any merchant that accepts cash is grappling with this,” said Dylan Jeon, senior director of government relations with the National Retail Federation, whose members include Walmart, Target, Macy’s, and Old Navy. Some major convenience chains have already begun warning customers. Sheetz, a family-owned convenience store, posted signs at one of its Pennsylvania stores that read: “The US Mint will no longer produce pennies, so we are short on change!” The signs encourage customers to use cashless payment options, round up purchases to support charity, or exchange US$1 in spare pennies for a free self-serve drink. Kwik Trip, the convenience store chain based in La Crosse, Wisconsin, announced that its 850 stores across the Midwest would round cash transactions down to the nearest nickel. At a Dallas location, a sign warns customers: “The US Treasury has stopped making pennies and we may experience shortages.” Kroger, one of the largest US grocery chains, told Reuters it is still assessing the impact of the penny shortage. Many of its 2,700 locations have displayed signs asking customers for exact change. Individual stores with other large chains have done the same, such as a CVS in Alexandria, Virginia, that posted a notice asking for exact change because of a “penny shortage”. Several countries, including Canada, Australia, Ireland and New Zealand, have phased out their lowest-value coins, rounding cash transactions up or down to the nearest five cents while keeping electronic payments exact. The moves cut minting costs and simplified cash handling for retailers. In the US, phasing out pennies would require similar rounding practices at stores, adjustments to registers, and clear communication to consumers, but could deliver comparable savings and efficiency gains. Several states, including California, New York and Illinois, however, have consumer protection laws that require retailers to provide exact change on cash transactions, creating legal uncertainty as pennies disappear from circulation. Retail groups say those rules make it difficult to adjust prices or round totals without risking fines or customer complaints. While Trump’s directive initiated the end to production, Congress retains authority over coinage, meaning legislation may still be required for a permanent discontinuation. The National Retail Federation has been lobbying the Trump administration and Congress to provide consistent guidance, particularly around rounding transactions. “What’s most helpful in the near term is clarity on rounding practices – whether retailers can round up or down on transaction totals or change,” Jeon said. – Reuters

long time, and that’s what happened here,” he said. The US$13.49 billion quarterly operating profit, or about US$9,376 per Class A share, grew from US$10.09 billion a year earlier. Currency fluctuations accounted for more than two-fifths of the increase. Results benefited in part from an absence of major catastrophes such as hurricanes. But the Geico car insurer reported lower gains as it spent more, possibly on advertising, to acquire new policies. Insurance will likely face headwinds as falling interest rates reduce income from Berkshire’s cash holdings, which also occurred in the third quarter. The BNSF railroad boosted profit 6%, citing lower fuel costs and “improved employee productivity.” Meanwhile, a 9% drop in profit at Berkshire Hathaway Energy reflected legal bills from wildfires, and higher costs from natural gas pipelines and Northern Powergrid in Britain. Berkshire is still evaluating how US President Donald Trump’s One Big Beautiful Bill Act signed in July might affect the viability of its renewable energy projects. The US$30.8 billion of net income, or US$21,413 per Class A share, rose from US$26.25 billion a year earlier. Net results include gains and losses on stocks Berkshire is not selling. This adds volatility, and Buffett believes such results are useless in understanding his company. Investors have voted their apprehension about Berkshire’s outlook and pending management change by selling its stock. Since Buffett announced on May 3 he would step down, Berkshire’s stock price has fallen 12%, and trailed the Standard & Poor’s 500 by 32 percentage points. For all of 2025, Berkshire is 11 percentage points behind the index. “Impatient investors feel an urgent need for Berkshire to deploy its cash, and have been casting their nets elsewhere,” said Tom Russo, a partner at Gardner Russo & Quinn in Lancaster, Pennsylvania, which invests US$10 billion. Russo has owned Berkshire stock since 1982 and said Berkshire remains “extremely well-positioned” for the long term. “Berkshire isn’t going to deploy capital that won’t increase intrinsic value on a per share basis,” he said. “Knowing that guides Berkshire means investors won’t have to second-guess it.” The conglomerate owns close to 200 businesses that also include chemical and industrial companies, and familiar consumer brands such as Dairy Queen and See’s Candies. It has not made a huge acquisition since paying US$32.1 billion for aerospace parts maker Precision Castparts in 2016. “Abel has a tremendous opportunity,” Shanahan said. – Reuters

Loom apparel and Squishmallows toymaker Jazwares. “Berkshire, which is often considered a microcosm of the US economy, isn’t even keeping up,” said Cathy Seifert, a CFRA Research analyst with a “hold” rating on Berkshire. “Investors will struggle to find a catalyst for this stock.” Buffett, 95, is letting cash build up as he prepares to end his six-decade tenure as chief executive at the end of the year. Vice-chairman Greg Abel, 63, will succeed the legendary investor, though Buffett will remain chairman. Abel is known as a more hands-on manager than Buffett. It is unclear what he will do with Omaha, Nebraska-based Berkshire’s cash, with options potentially including paying the US$1.03 trillion conglomerate’s first dividend since 1967. Berkshire is planning to use US$9.7 billion of cash to buy Occidental Petroleum’s OxyChem chemicals business, a transaction announced on Oct 2. James Shanahan, an Edward Jones analyst who upgraded his Berkshire rating to “buy” in September, said the company’s resistance to spending more cash during this year’s market rally has been disappointing. “If you feel like stocks are expensive, including your own shares, you’re eventually going to be right, but you can be wrong for a

OMAHA: Berkshire Hathaway signalled on Saturday that it remained cautious about markets, letting cash swell to a record US$381.7 billion (RM1.6 trillion) even as profit rose, in its last financial report before Warren Buffett bows out as chief executive. For a 12th straight quarter, Buffett’s conglomerate sold more stocks than it bought for its US$283.2 billion equity portfolio, whose holdings include Apple and American Express. Berkshire also did not repurchase any of its own stock, the fifth straight quarter without buybacks, though its stock price has significantly lagged the broader market. Lower insurance losses helped boost third-quarter operating profit 34% to US$13.49 billion, topping analyst forecasts, while net income grew 17% to US$30.8 billion. But revenue grew just 2%, slower than the overall US economy’s growth rate. Economic uncertainty and waning consumer confidence have been drags, Berkshire said, stalling sales growth at the Clayton Homes homebuilder and reducing revenue from Duracell batteries, Fruit of the o Buffett prepares to give CEO title to Greg Abel

Buffett attends the Berkshire Hathaway Inc annual shareholders’ meeting in Omaha, Nebraska. – REUTERSPIC

Panama wins canal expansion arbitration against Spanish company PANAMA CITY: Panama’s government won a lawsuit against Spanish company Sacyr, officials said, after the firm claimed it was owed around US$2.3 billion (RM9.6 billion) for its work expanding the Panama Canal. Sacyr has been ordered to pay US$6 million in arbitration costs, officials said. Panama’s President Jose Raul Mulino hailed the decision on X, calling it “a great achievement.” As a result, Sacyr filed various claims but a tribunal in Washington said that if it had not dismissed the claims for lack of merit, it would have concluded they were

“inadmissible, as they were based on the contract for the execution of the job and not on the trade agreement between Panama and Spain”, the Panamanian goverment said in a statement. Panama faces a similar case filed by Italian company WeBuild, formerly Impregilo, for an undisclosed sum. The Panama Canal’s main users are the United States and China. – AFP

Along with Italy’s Impregilo, Belgium’s Jan De Nul and Panama’s Constructora Urbana, Sacyr was part of the consortium Grupo Unidos por el Canal that carried out the Panama Canal’s expansion between 2009 and 2016. The project was initially budgeted for US$5.25 billion but overran costs and faced delays due to disputes between Sacyr and canal authorities.

Sacyr sued Panama in 2018, alleging the Central American country violated a free trade agreement with Spain. “The Republic of Panama won the international investment arbitration claim filed by Sacyr S.A. under the Arbitration rules of the United Nations Commission on International Trade Law” and the tribunal rejected all claims submitted by Sacyr, Panamanian officials said in a press release.