Berkshire Hathaway, Warren Buffett's investment company, cut its first-quarter net income by almost a third, but operating profit rose 39%.
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Company's financial results
As stated in the company's press release, its net profit in January-March amounted to $12, 7 billion, or $8,825 thousand per Class A share, compared to $35.5 billion, or $24,377 thousand per share, for the same period of the previous year.
Profit from Berkshire's investments was $1.48 billion, compared with $27.44 billion a year earlier. In accordance with American accounting standards, this indicator takes into account changes in the value of securities owned by the company and, thus, is largely dependent on market fluctuations.
Operating income, which Buffett calls more indicative and which does not take into account unrealized gains /losses from investments increased by 39% to a record $11.22 billion.
Berkshire reported that its quarterly revenue rose to $89.87 billion from $85.39 billion a year earlier. Including revenue from the division, which includes the railroad, energy and utilities businesses, increased to $24.4 billion from $21.94 billion.
The volume of premiums collected by the insurance division increased to $21.47 billion from $19. 8 billion.
In the first quarter, Berkshire repurchased its own shares in the amount of $2.6 billion.
The volume of cash and cash equivalents, including the company's investments in short-term Treasury bills, at the end of March reached new record – $188.99 billion.
The company's total assets at the end of March were approximately $809.614 billion, compared to $811.206 billion at the end of 2023.
Including the portfolio of stocks owned by Berkshire, it was valued at $335.864 billion, up from $353.842 billion at the end of 2023. About 75% of this amount was invested in the securities of five companies: American Express ($34.5 billion at the end of March), Apple Inc. ($135.4 billion), Bank of America Corp. ($39.2 billion), Coca-Cola Co. ($24.5 billion) and Chevron Corp. ($19.4 billion). At the end of December 2023, the combined share of these companies in Berkshire's portfolio was about 79%.
The stake in Apple fell by about 13% during the quarter to 790 million shares. In a message to shareholders, Warren Buffett said his view of the iPhone maker has not changed and Apple will likely remain the largest component of Berkshire's portfolio at the end of the year.
“American Express and Coca-Cola are great companies,” Buffett noted. — And Apple is even better. When Greg (Abel, Buffett's likely successor) is running the company, Apple will be in our portfolio. If nothing serious happens, Apple will be our largest investment.”
In addition, Berkshire sold a stake in the media company Paramount Global. “It was 100% my decision, we sold everything and lost enough money,” Buffett said. At the end of 2023, Berkshire owned 63 million, or about 10%, of Paramount's non-voting shares.
Berkshire's Class A shares are up 22.6% over the past 12 months. For comparison, the S&P 500 index grew by 23.9% during this time.