Berkshire Hathaway on Saturday reported strong operating profits and a record pile of cash in the first quarter, showing the real profits generated by the company’s line of business, the conglomerate run by Warren E. Buffett. highlighted the soundness of
The results provided a positive backdrop for Berkshire’s annual shareholder meeting to be held in downtown Omaha, where it is based. It will be the first such gathering for Buffett’s business empire since his longtime business partner and alter ego, Charles Munger, died in November at age 99.
Saturday’s results show that operating profit is the best way to judge Berkshire, a conglomerate of companies that includes major railroads, large power generation projects, insurance and consumer brands such as Fruit of the Loom. This confirms Buffett’s repeated advice. It’s not net profit.
Berkshire reported $12.7 billion in profit attributable to shareholders for the first three months of this year, down 64% from a year earlier. The decline was driven by a sharp decline in the paper value of Berkshire’s vast investment portfolio, but Buffett has long warned shareholders to ignore fluctuations in the company’s holdings.
Berkshire also said it reduced Buffett’s huge stake in Apple, one of the company’s most important holdings, by about 13% in the quarter. The company’s stock is now worth about $135.4 billion, down from $174.3 billion at the end of 2023 (Apple CEO Tim Cook attended the annual meeting).
But Buffett said he remains a big Apple fan and suggested the stock sale was to take away some of the company’s profits. “At the end of the year, it is very likely that Apple will be the largest common stock that we currently own,” he told shareholders on Saturday.
Looking at operating profit, Mr. Buffett’s favorite metric for gauging the specific health of Berkshire’s business, the company reported a 40% increase to $11.2 billion. This was as Berkshire’s core underwriting business more than doubled, as its insurance company Geico reported higher premiums per policy and claims fell. The company’s reinsurance division was not hit by any major catastrophes in the first quarter of this year.
These gains offset weaker performance in other parts of Buffett’s empire, including an 8% decline in BNSF Railway’s net income due to lower fuel shipments relative to consumer goods and lower fuel surcharge revenue. Ta.
Pilot Travel Centers, the truck stop chain the company took full control of in January, reported a 19% drop in net income due to lower fuel sales margins and higher operating expenses.
And Berkshire revealed that its Western utility company, PacifiCorp, is facing federal and state investigations and lawsuits over its role in the 2020 and 2022 wildfires.
The financial results were released ahead of the Berkshire meeting. Tens of thousands of Berkshire shareholders gathered at the company’s local CHI Health Center Arena to watch Buffett answer questions.
Among the topics Buffett brought up at the meeting was Berkshire’s cash pile, which he said he is willing to keep piling up unless or until a potentially lucrative investment opportunity arises.
That said, he said in his annual letter to investors in February that mega-acquisitions like the one that helped mint his fortune are unlikely and could put a cap on Berkshire’s profits in the future. He suggested that there is a possibility that a
“We’d love to spend money, but we won’t spend money unless we think we’re doing something that has little risk and will make us a lot of money,” Buffett said.
He praised the United States as a place to do business, adding that Berkshire is willing to pay a portion of the federal tax bill. He predicted that as the federal deficit continues to grow, taxes will rise as well, and he said he is satisfied with Berkshire paying more than its current tax rate of 21%.
But what was most notable about the meeting was the absence of Mr. Munger, who has served as Mr. Buffett’s advisor, company co-promoter and comic foil for decades. The rally began with a lengthy video tribute to Munger, who was Berkshire’s vice chairman, and Buffett repeatedly praised his former business partner.
At one point during the Q&A, Buffett mistakenly referred to his successor, the company’s CEO Gregory Abel, who was helping answer questions, as “Charlie.”
When Buffett pointed out his mistake, the audience applauded.
