Buffett’s Berkshire Hathaway profit grew by 13%
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The operating profit of Warren Buffett’s Berkshire Hathaway increased by 12.6% to $8.065 billion in the first quarter of 2023, according to the financial conglomerate’s reporting.
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What did Buffett earn?
The main part of the growth came from the insurance business, which is controlled by the holding — the profit of this direction in the total complexity was $2.88 billion against $1.34 billion a year earlier (a more than two-fold increase).
In particular, auto insurer Geico earned $703 million after several unprofitable quarters. This was facilitated by higher average premiums received from car owners and lower advertising costs.
Bloomberg notes that previously the company’s indicators were under the pressure of inflation – because of it, the cost of materials that are used in the repair of cars has increased, and the cost of labor has also increased. In addition, Geico faced serious competition within its segment.
Read: What Buffett earned in 2022
The profit of the railway operator Burlington Northern Santa Fe (BNSF) decreased by 9.04% year-on-year to $1.247 billion, and the oil and gas company Berkshire Hathaway Energy Company — by 46.3% to $416 million.
Such a significant drop reflects a number of trends, including a decrease in revenues from regulated utilities in the United States, Berkshire’s report explains.
The net profit, which was formed by adding the operating profit and the financial result from transactions on the stock market, grew 6.3 times compared to the first quarter of 2022 and amounted to $35.5 billion.
At the same time, Buffett himself reminded shareholders more than once that “the analysis of profits or losses obtained from investment activity in a single quarter usually does not make sense.”
Such a significant growth of this indicator reflects the price dynamics of shares of companies such as Apple in the first quarter, writes CNBC. From the beginning of the year to the end of March, the quotations of the technological giant, which occupies the largest share in the portfolio of Berkshire Hathaway, jumped on the NASDAQ by 26.9%.
As of March 31, 2023, about 77% of the value of Berkshire Hathaway’s portfolio was held by the securities of five companies:
- Apple — $151 billion;
- Bank of America — $29.5 billion
- American Express — $25 billion
- Coca-Cola — $24.8 billion
- Chevron — $21.6 billion.
For comparison, at the end of the fourth quarter, the share of the top 5 companies in the portfolio was estimated at approximately 75%. At the same time, the value of Apple shares in Berkshire Hathaway’s portfolio increased by $32 billion in the first quarter, the value of the package in Bank of America, on the contrary, decreased by $4.7 billion in three months, and in Chevron – by $8.4 billion.
Berkshire’s cash “cushion” grew during the quarter from $128.6 billion to $130.6 billion. According to Bloomberg, Buffett’s conglomerate was a net seller of securities, and the difference between sales and purchases amounted to $10.4 billion.
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Source: Ministry of Finance
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