OMAHA, Neb. — Berkshire Hathaway reported a significant downturn in profits for the previous quarter, coinciding with Warren Buffett’s announcement of his impending retirement as CEO at the year’s end. Buffett, who has led the conglomerate for decades, indicated that Vice Chairman Greg Abel will succeed him, having already overseen the company’s non-insurance operations for several years.
In its earnings report, Berkshire revealed a profit of $4.6 billion, translating to $3,200 per Class A share, a stark decline from $12.7 billion or $8,825 per share during the same time last year. The drop stemmed from considerable losses in its investment portfolio and approximately $860 million in insurance losses linked to policies written before the catastrophic Southern California wildfires.
Buffett has long advised investors to focus on the company’s operating earnings, which provide a clearer picture of its ongoing business performance, excluding fluctuating investment values. On that basis, Berkshire’s operational earnings fell to $9.6 billion, or $6,703.41 per Class A share, down from $11.2 billion, or $7,796.47 per share, the previous year. Analysts had projected lower operating earnings of around $7,076.90 per Class A share.
Buffett’s commentary took center stage during the shareholder meeting, overshadowing the financial report. A key point of contention among investors is Berkshire’s substantial cash reserve, which rose to $347.7 billion by the end of the quarter, a notable increase from $334.2 billion at the start of the year. Buffett expressed difficulty in finding investments that meet his criteria, citing that recent market fluctuations in April were insufficient to stimulate attractive opportunities.
The CEO revealed he nearly finalized a $10 billion deal that ultimately fell through, though he did not provide specific details. The varied operations within Berkshire, including its rail and utility sectors, are closely tied to economic conditions. Yet, the company acknowledged potential risks from geopolitical tensions and trade policies affecting future performance.
Earnings from its railroad subsidiary, BNSF, as well as utility divisions improved during the quarter, while its retail and manufacturing units remained stable. However, the most significant drop in operating profits resulted from issues within its insurance underwriting sector, primarily impacted by wildfire losses. Despite this, Geico’s underwriting profits rose to $2.2 billion, compared to $1.9 billion last year.
Concerns over tariffs also loom large among Berkshire’s subsidiaries. Troy Bader, CEO of Dairy Queen, expressed confidence in the chain’s ability to manage the trade war repercussions, citing local sourcing for most ingredients, even though they operate thousands of locations in China. Conversely, Brooks Running, which manufactures all its shoes in Vietnam and Indonesia, might face increased prices due to tariffs, according to CEO Dan Sheridan, who is currently assessing the situation.
Market analysts suggest that while Berkshire’s results appear solid aside from wildfire-related losses, the company has continued a trend of selling off stocks, unloading $1.5 billion more than it purchased in the last quarter. This strategy has contributed to the ever-growing cash reserve, more than doubling from a year ago—an outcome reflecting Buffett’s cautious stance amid ongoing market dynamics.
Buffett extended praise to Apple CEO Tim Cook, who attended the annual shareholders meeting, highlighting the substantial profits the tech giant has generated for Berkshire. The conglomerate owns a diverse portfolio, including brands like Geico, BNSF railway, and a variety of utility and retail businesses, making it one of the most prominent players in multiple sectors.