Warren Buffett before Berkshire Hathaway’s annual meeting in Omaha, NE.
David A. Grogan | CNBC
Berkshire Hathaway reported a sharp rise in fourth-quarter operating profits on Saturday thanks to huge gains in its insurance business, while its cash balance grew to record levels.
The Omaha-based conglomerate reported operating profit – which refers to profits at companies in the insurance, railroad and utility sectors – of $8.481 billion in the quarter ended December. That’s 28% more than $6.625 billion in the same period last year.
For full-year 2023, operating income increased to $37.350 billion, up 17% from $30.853 billion a year ago.
Berkshire also held $167.6 billion in cash in the fourth quarter, a record that exceeds the $157.2 billion the conglomerate held in the previous quarter.
Berkshire Class A shares have gained about 16% this year.
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Berkshire Hathaway Class A Shares
Geico, the auto insurer considered Buffett’s “favorite child,” reported a profitable year with net insurance revenue of $5.428 billion in 2023. The improved earnings were due to premium increases and lower claims last year.
Meanwhile, Burlington Northern Santa Fe (BNSF) reported full-year net income of $5.087 billion last year, down 14% from $5.946 billion a year earlier.
Insurance business rose 430% to $848 million in the fourth quarter from $160 million in the same period last year, boosting the conglomerate’s operating profits.
Insurance investment income also increased quarterly to $2.759 billion, up 37% from $2.0 billion in the same period last year.
But railroad operating income fell in the fourth quarter, as did utilities and energy companies. Railroad operating income fell to $1.355 billion from $1.469 billion a year earlier. Operating profit in the utilities and energy sector fell to $632 million from $739 million a year ago.
Berkshire’s total profit, which includes the company’s investment gains from publicly traded companies, more than doubled during the quarter from the same period last year, reaching $37.57 billion. For the full year, total profit was $96.22 billion.
However, the conglomerate included its usual disclaimer advising investors to look past fluctuations in quarterly results.
“We believe that investment gains and losses from investments in equity securities, whether realized through dispositions or not realized through changes in market prices, are generally insignificant in understanding our reported periodic results or evaluating the economic performance of our operations are,” the annual report said in a statement.
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2024-02-24 14:14:59
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