Warren Buffet's Berkshire Hathaway Q1 operating profit rises 39% to $11.22 billion, net income drops 64% YoY

The multinational conglomerate’s income fell to $12.7 billion in the quarter-under-review, or $8,838 per share, from $35.5 billion, when Berkshire had large unrealized gains from its stocks. An accounting rule requires Berkshire to report the unrealized gains and losses with the net results, and Buffett urges investors to ignore the resulting volatility, according to news agency Reuters. 

Also Read: Warren Buffet’s Berkshire Hathaway trims Apple stake by 13% in Q1, remains biggest holding worth $135 billion

The quarterly results were released ahead of Berkshire’s annual shareholder meeting in Omaha, part of a weekend that draws thousands of people to the city. Today’s marks the 60th annual general meeting (AGM) for Buffet and also the first meeting since Vice President Charlie Munger, Buffett’s longtime friend and business partner, passed away in November 2023 at age of 99. 

Berkshire Hathaway Q1 Results: Key Metrics

Berkshire also repurchased $2.6 billion of its own stock in the first quarter, and a small amount in the first three weeks of April. The firm’s hoard increased to $189 billion at the end of the first quarter, topping the record it set at year-end.

Berkshire’s revenue grew five per cent to $89.87 billion in the quarter. Berkshire’s earnings rose despite Buffett’s warning in May last year that profits at most of its operations would fall in 2023 as an “incredible period” for the US economy draws to an end. With businesses including railroad, retail, construction and energy, Berkshire is closely watched as a litmus test for US economic health, particularly amid elevated inflation and interest rates.

Also Read: Charlie Munger’s pearls of wisdom for investing money in the stock market

Insurance profit soared 80 per cent to $5.2 billion. This included a more than doubling of underwriting profit at Geico, which benefited from rate increases and a large decline in the percentage of premiums it used to pay for accident losses. The conglomerate’s railroad unit BNSF reported an 8.3 per cent decline in earnings from the prior period, which Berkshire said was down to “unfavorable changes in business mix” as well as lower fuel surcharge revenues.

Berkshire Hathaway Energy saw profit rise 72 per cent, as improved operating performance from utilities helped offset rising legal costs at the HomeServices of America real estate brokerage related to a nationwide settlement over brokerage commissions. The energy business still faces billions of dollars in claims against its PacifiCorp unit over Oregon wildfires in 2020.

Berkshire pares stake in Tim Cook’s Apple as cash

Berkshire Hathaway reported that its Apple bet was worth $135.4 billion, implying around 790 million shares. This marks a decline of around 13 per cent in the stake. Hathaway significantly reduced its investment in the tech giant as the company let its cash hoard swell to a record $189 billion, stated above.

Apple still remains Berkshire’s biggest holding by far at the end of the quarter. Apple CEO Tim Cook, who is at the Berkshire meeting, has said that he still considers it a privilege to have Berkshire as a major shareholder. The Apple sales resulted in Berkshire’s realizing $11.2 billion of after-tax gains in the quarter from selling investments. Buffett maintained that he does not mind paying taxes.

With inputs from Bloomberg, Reuters

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Published: 04 May 2024, 05:48 PM IST