Warren Buffett's Berkshire Hathaway Inc announced its fourth quarter results on Saturday, reporting a surge of 71 percent in its operating profit to $14.5 billion, mostly driven by the investment income and insurance business amid high interest rates.
The multinational conglomerate reported its third straight record annual operating profit, bolstered by large increases in underwriting earnings. The Omaha, Nebraska-based company's fourth-quarter operating profit hit a record $14.53 billion, or $1,010 per Class A share, from $8.48 billion a year earlier, reflecting gains in its insurance operations and foreign currency changes.
The increase in operating earnings was driven by a 48 percent jump in insurance investment income to $4.1 billion. The operating profit rose 27 percent to $47.44 billion in 2024 from $37.35 billion a year earlier. The quarterly net income was $19.69 billion, or $13,695 per average equivalent share, with the value of Berkshire's holdings in Apple and American Express increasing.
For the year, net income totalled $89 billion. The rise in earnings also got a significant boost from a strong recovery in the firm’s insurance underwriting business, with operating earnings quadrupling over the period to $3.4 billion.
In his annual letter to Berkshire shareholders, Buffett assured them that Berkshire would prefer to invest in businesses to hold cash. But he also said his conglomerate "did better than I expected," though 53 percent of its 189 operating businesses posted lower earnings. He attributed the improvement partly to higher yields on US treasury bills and improvement at the Geico car insurer, which benefited from improved pricing and tighter underwriting.
GEICO was the main contributor to Berkshire’s insurance results, with its pre-tax underwriting earnings more than doubling to $7.8 billion in 2024. The auto insurer successfully added new clients in the second half, reversing a years-long trend that previously weighed on its performance.
The increase in Berkshire's cash stake in 2024 largely came from the sale of $143.4 billion of stock, including 62 percent of Berkshire's holdings in Apple and one-third of its stake in Bank of America. It declined to buy back its own shares for the second quarter in a row, a sign that Buffett believes the stock trades above its intrinsic value.
Berkshire's businesses include the BNSF railroad, industrial parts and chemical companies, a big real estate brokerage, and retail brands such as Dairy Queen ice cream, Fruit of the Loom underwear, and See's candies. Since last month, Berkshire’s market capitalistation has been hovering above $1 trillion.
The legendary, 94-year-old, billionaire investor Warren Buffett, while celebrating another success of his multinational conglomerate Berkshire Hathaway, offered some advice to US President Donald Trump in his annual letter to Hathway shareholders on Saturday.
Buffett urged Trump to ‘spend wisely’, maintain a stable currency and care for those who get “short straws in life.”
“Paper money can see its value evaporate if fiscal folly prevails,” wrote the Oracle of Omaha in the annual letter. “In some countries, this reckless practice has become habitual, and, in our country's short history, the US has come close to the edge,” said Buffett, advising Trump to ‘spend money wisely’ and maintain a stable US dollar.
(By arrangement with livemint.com)
