OMAHA, Neb. — Warren Buffett’s Berkshire Hathaway announced a profit report on Saturday, revealing that it generated just over one-third of last year’s earnings. This disclosure came shortly before Buffett’s surprise announcement that he plans to retire as CEO at the end of the year, marking a significant shift in leadership for the investment giant.
Greg Abel, currently the Vice Chairman, is set to take over as CEO, a transition that Buffett has been preparing for over the years. Abel has been responsible for overseeing all of Berkshire’s noninsurance businesses and will now also manage the conglomerate’s various insurance operations along with its substantial cash reserves.
The company’s profits took a hit due to a sharp decline in the value of its investments, compounded by $860 million in insurance losses related to policies issued prior to the recent wildfires in Southern California. In its latest earnings report, Berkshire detailed earnings of $4.6 billion, or $3,200 per Class A share, a stark drop from $12.7 billion, or $8,825 per Class A share, reported during the same period last year.
Buffett has often urged investors to focus on operating earnings, which exclude fluctuations from the value of investments. By this metric, Berkshire’s earnings fell by 14% to $9.6 billion, or $6,703.41 per Class A share, down from $11.2 billion, or $7,796.47 per share, reported last year. Analysts had anticipated higher operating earnings of $7,076.90 per Class A share.
Buffett’s remarks during the shareholder meeting captured significant attention, particularly concerning the company’s mounting cash reserves, which rose to $347.7 billion by the end of the first quarter from $334.2 billion at the year’s close. He noted a lack of attractive deals that fit his investment criteria, stating that recent market conditions did not present enough enticing opportunities.
During the first quarter, Buffett nearly finalized a $10 billion deal that ultimately fell through, though details remain undisclosed. Berkshire’s vast array of businesses, including its railroad and various manufacturing sectors, are closely tied to economic conditions, and the company acknowledged that future earnings may be influenced by geopolitical tensions and evolving trade policies.
Despite the challenges, there was notable growth in earnings for Berkshire’s utility sector and its BNSF railroad, while manufacturing and retail results remained steady. The most significant downturn occurred in insurance underwriting from substantial wildfire-related losses.
Geico’s underwriting profits rose to $2.2 billion, up from $1.9 billion the previous year. However, difficulties with reinsurance and primary insurance divisions negatively affected overall insurance profits. Concerns surrounding tariffs also loom large, with executives from various Berkshire companies discussing how potential increases in tariffs could impact their operations and pricing strategies.
While some businesses, like Dairy Queen, reported confidence in weathering trade challenges, others, such as Brooks Running, voiced uncertainty over price increases that may be necessary due to tariffs.
Edward Jones analyst Kyle Sanders remarked that Berkshire’s results were solid, excluding the wildfire losses, but noted the company’s ongoing strategy of reducing its stock portfolio. During the quarter, Berkshire sold $1.5 billion more in stocks than it acquired, contributing to a cash position that has more than doubled from a year ago as Buffett has been cautious, particularly regarding his reduced stake in Apple.
Buffett expressed admiration for Apple CEO Tim Cook, recognizing the significant financial contributions made by the tech giant to Berkshire’s portfolio. Berkshire Hathaway is distinguished by its ownership of diverse companies, including Geico, BNSF railroad, a multitude of utilities, and a variety of well-known brands spanning retail and manufacturing, underscoring its impact on both the economy and investment landscape.
