Berkshire Hathaway on Saturday reported strong operating profits, which track the real profits its business produces, and a record pile of cash in the first quarter, highlighting the health of the conglomerate run by Warren E. Buffett.
The results provided a positive backdrop for Berkshire’s annual shareholder meeting in downtown Omaha, the company’s hometown. It is the first meeting of its kind for Buffett’s business empire since the death in November of Charles Munger, Buffett’s longtime business partner and alter ego, at age 99.
Saturday’s results underscore Buffett’s repeated warning that the best way to judge Berkshire — a collection of businesses that includes a major railroad, a substantial power generation business, insurance, consumer brands including Fruit of the Loom and much more – it is for operating profits. not net profit.
In the first three months of the year, Berkshire reported $12.7 billion in profits attributable to its shareholders, a 64% drop from the same period the previous year. What caused the drop was a sharp drop in the value of Berkshire’s vast investment portfolio, although Buffett has long warned shareholders to ignore fluctuations in the company’s shareholdings.
Berkshire also revealed that it reduced its huge stake in Apple, which Buffett called one of his company’s most important holdings, by about 13% in the quarter. The value of its stake is now about $135.4 billion, down from $174.3 billion at the end of 2023. (Apple chief executive Tim Cook is attending the annual meeting.)
But Buffett said he remains a big fan of Apple, suggesting that selling shares would take some profits off the table. “I would say by the end of the year it would be extremely likely that Apple would be the largest common stock holding that we have right now,” he told shareholders on Saturday.
Looking at operating profits, Buffett’s preferred metric because it measures the tangible health of Berkshire’s business, the company reported a 40% gain to $11.2 billion. This was driven by more than doubling Berkshire’s core insurance underwriting business, as its insurer Geico charged higher premiums per policy and reported fewer claims, while its reinsurance division suffered no catastrophe impacts in the first quarter of this year.
Those gains offset weaker results elsewhere in Buffett’s empire, including an 8% drop in railroad BNSF’s net profit due to lower fuel shipments compared to consumer goods and lower revenues from fuel surcharges.
Its truck stop chain Pilot Travel Centers, which it acquired full control of in January, reported a 19 percent drop in net profits as the business reported lower margins on fuel sales and higher operating expenses.
And Berkshire revealed that its dealership PacifiCorp, which operates in the West, faces federal and state investigations and lawsuits for any role it played in the 2020 and 2022 wildfires.
The earnings report was released ahead of the Berkshire meeting. Tens of thousands of Berkshire shareholders gathered at the CHI Health Center arena in the company’s hometown to watch Buffett answer questions.
Among the topics Buffett covered at the meeting was Berkshire’s cash pile, which he said he was happy to continue accumulating unless or until a potentially profitable investment opportunity emerged.
That said, he suggested in his annual letter to investors in February that a mammoth acquisition — the kind that helped mint his fortune — was unlikely, putting a cap on Berkshire’s future returns. “In short, we have no possibility of a surprising performance,” he wrote.
Buffett also said Saturday that Berkshire was prepared to pay its share of federal taxes, including potentially more than the current 21 percent rate, as he touted the United States as a place to do business.
