Berkshire Hathaway, led by Warren Buffett, has reported a substantial year-over-year increase in operating earnings in the first quarter. The conglomerate’s operating profit, which includes earnings from its wholly owned businesses, surged by an impressive 39% to $11.22 billion compared to the same period last year.
One of the key drivers of this growth was the remarkable 185% increase in insurance underwriting earnings, which soared to $2.598 billion from just $911 million in the previous year. Notably, Geico’s earnings also saw a substantial uptick, rising by 174% to $1.928 billion. Furthermore, insurance investment income experienced a significant 32% increase, exceeding $2.5 billion.
Berkshire’s railroad business delivered a profit of $1.14 billion, slightly lower than the first quarter of 2023. On the other hand, the energy division witnessed a substantial growth in earnings, nearly doubling to $717 million from $416 million in the prior year.
Net Earnings and Cash Holdings
Despite the impressive operating performance, first-quarter net earnings, which include fluctuations from Berkshire’s stock investments, declined by 64% to $12.7 billion. However, the company’s cash hoard reached a record high of $188.99 billion, up from $167.6 billion in the fourth quarter. This significant cash reserve reflects Buffett’s challenge in identifying suitable major acquisition targets, a concern he has expressed in recent years.
While Berkshire reduced its stake in Apple by 13%, the tech giant remained the conglomerate’s largest stock holding. Moreover, Berkshire repurchased $2.6 billion in stock during the first quarter, an increase from $2.2 billion in the previous quarter.
As Berkshire gears up for its annual shareholder meeting, affectionately dubbed “Woodstock for Capitalists,” Buffett will address inquiries from shareholders regarding the company’s holdings, investment strategies, and economic perspectives. This event marks the first meeting since the passing of Vice Chairman Charlie Munger in November. Year to date, Berkshire Class A shares have surged by more than 11%, reaching a new all-time high in late February, while Class B stock has also gained over 12% during this period.
Berkshire Hathaway’s impressive performance in the first quarter underscores the resilience and adaptability of the conglomerate under the leadership of Warren Buffett. Despite facing challenges in the current investment landscape, Berkshire’s strong financial position and strategic decision-making bode well for its future growth and sustained success in the market.