Berkshire Hathaway on Saturday reported a sharp drop in first-quarter profit, driven largely by lower investment income, as the conglomerate’s chief executive, Warren E. Buffett, prepares to speak at its annual investor meeting.
Those results belie an increase in operating profits, which track the actual profits produced by Berkshire’s entire business, and in Berkshire’s formidable cash hoard, which amounted to nearly $189 billion as of March 31, which points to the solid health of the company.
The company’s latest results set the backdrop for the meeting in downtown Omaha, which will be the first for Berkshire since the death in November of Charles Munger, Buffett’s longtime business partner and alter ego, at age 99.
During the first three months of the year, Berkshire reported $12.7 billion in profits attributable to its shareholders, down 64 percent from the same period a year earlier. Driving the decline was a sharp drop in the paper value of Berkshire’s vast investment portfolio, although Buffett has long warned shareholders to ignore fluctuations in the company’s stock holdings.
Berkshire also revealed that it had cut its huge stake in Apple, which Buffett has called one of his company’s largest holdings, by about 13 percent in the quarter. It now holds about $135.4 billion, up from $174.3 billion at the end of 2023 (Apple CEO Tim Cook will attend the annual meeting).
Turning to operating profit, Buffett’s favorite metric because it measures the tangible health of Berkshire’s business, the company reported a 40 percent gain to $11.2 billion. This was driven by a doubling of Berkshire’s core insurance underwriting business, as its Geico insurer charged higher premiums per policy and reported fewer claims, while its reinsurance division suffered no catastrophe impact in the first quarter of this year. anus.
Those gains offset weaker results elsewhere in Buffett’s empire, including an 8 percent drop in net profits at BNSF railroad due to lower shipments of fuel versus consumer goods and lower revenue from fuel surcharges.
Its Pilot Travel Centers truck stop chain, which it acquired full control of in January, reported a 19 percent drop in net profits as the business experienced lower margins on fuel sales and higher operating expenses.
And Berkshire revealed that its utility 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, at which tens of thousands of Berkshire shareholders will gather at the CHI Health Center stadium in the company’s hometown to watch Buffett answer questions.
Among the topics he will likely discuss — some with the help of his top lieutenants, including his likely successor, Gregory Abel — are his outlook on the economy and the November election and where he sees investment opportunities.