Buffett's Berkshire posts $35.5 billion profit, buys back more stock
Reuters
Published May 06, 2023 08:24AM ET
Updated May 06, 2023 10:30PM ET
By Jonathan Stempel
OMAHA, Nebraska (Reuters) - Warren Buffett's Berkshire Hathaway (NYSE:BRKa) Inc posted a $35.5 billion first-quarter profit on Saturday, reflecting gains from stocks such as Apple Inc (NASDAQ:AAPL), while higher investment income and a rebound at car insurer Geico bolstered operating results.
Berkshire also sped up repurchases of its own stock, buying back $4.4 billion, while paring its investments in other stocks such as Chevron Corp (NYSE:CVX), which is still a major holding.
Results were released ahead of Berkshire's annual shareholder meeting in Omaha, part of a weekend that draws tens of thousands of people to the city.
Buffett, 92, has run Berkshire since 1965, transforming it from a struggling textile company into a conglomerate with dozens of businesses including Geico, the BNSF railroad, Berkshire Hathaway Energy, and manufacturing and retail units including See's Candies and Dairy Queen ice cream.
The diversification has led many investors, not just Buffett fans, to view Berkshire as a stable long-term investment even amid recession fears and concerns about the banking industry.
MORE CASH
Net income equaled $24,377 per Class A share and rose from $5.58 billion, or $3,784 per share, a year earlier.
That in part reflected a 27% jump in Apple's stock price, leaving Berkshire with a $151 billion stake in the iPhone maker.
An accounting rule requires Berkshire to report unrealized gains and losses with net results, and Buffett urges investors to ignore the resulting volatility.
Quarterly operating profit increased 13% to $8.07 billion, or about $5,561 per Class A share, from $7.16 billion.
Those results benefited from Geico snapping a six-quarter string of underwriting losses, and a 68% increase in how much Berkshire's insurance units generate from investments.
Geico's pretax underwriting gain was $703 million, benefiting from higher premiums, fewer crashes and a significant drop in ad spending, which may have led to fewer high-risk drivers seeking coverage.
Berkshire's cash hoard grew $2 billion in the quarter to $130.6 billion, as the company sold $13.3 billion of stocks and bought just $2.9 billion.
Chevron appears to have been among the sales, with Berkshire's stake falling 28% to $21.6 billion though the oil company's stock price dropped just 9%.
Berkshire also owns a 23.6% stake in another oil company, Occidental Petroleum Corp (NYSE:OXY).
Its stock sales more than offset the $8.2 billion Berkshire spent to boost its stake in truck stop operator Pilot Travel Centers to 80% from 38.6%, leaving the founding Haslam family with 20%. The increase was expected.
Get The News You Want
IMPACT OF WILDFIRES
Profit at the BNSF railroad fell 9% to $1.25 billion, hurt by higher fuel costs and lower shipping volumes.
Berkshire Hathaway Energy, normally a steady earnings generator, saw profit fall 46% as it set aside $359 million for legal and other costs from wildfires in Oregon and northern California, where it has multiple operations, in 2020.
Operating results also reflected October's purchase of insurance holding company Alleghany (NYSE:Y) Corp, while net results included a gain related to Pilot.
Berkshire's Class A shares have risen 4.9% this year, trailing the Standard & Poor's 500's 7.7% gain. The index lagged Berkshire by 23.4 percentage points in 2022, excluding dividends.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.