Berkshire Posts Profit Gains, Boosted By U.S. Treasury Holdings
The conglomerate more than doubled its Treasury holdings from a year earlier, thanks in part to the cash generated by selling a big chunk of its stake in Apple. The conglomerate more than doubled its Treasury holdings from a year earlier, thanks in part to the cash generated by selling a big chunk of its stake in Apple.
In his annual report and letter to shareholders, released on Saturday, Mr. Buffett defended Berkshire’s hoard, which he has said he was happy to keep building up unless or until a potentially lucrative investment opportunity arose.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses,” Mr. Buffett wrote.
But the steady interest rates offered by Treasury bills helped stabilize Mr. Buffett’s empire during a year in which more than half of the nearly 200 businesses it operates saw their earnings drop. Berkshire Hathaway had net earnings last year of $90 billion, a decline from the more than $96 billion it generated a year earlier.
The company’s operating earnings — the metric Mr. Buffett prefers because it excludes paper losses and gains on investments that have not been sold — were $47 billion in 2024, up from $37 billion in 2023.
Berkshire’s core business line, insurance, showed significant gains in its investment and underwriting income. The lack of any “monster” event in 2024 was a major boon, Mr. Buffett wrote, though he acknowledged that the industry will have to “unemotionally take our lumps” when that luck turns.
“Someday, any day, a truly staggering insurance loss will occur,” he wrote. “Think wildfires,” he added later in a parenthetical note, referring to the fires that devastated Los Angeles.
Geico, Berkshire’s car insurance business, moved from a nearly $2 billion loss on its underwriting business in 2022 to earnings of nearly $8 billion in 2024.
The company was “a long-held gem that needed major repolishing,” Mr. Buffett wrote, citing the work that Todd Combs has done to overhaul the business. Mr. Combs is a Berkshire investment manager who became Geico’s chief executive in 2020.
Berkshire finalized its hold last year on Pilot Travel Centers, a gas and truck stop chain in which the conglomerate started investing in 2017. It now owns it outright. Lower average fuel prices took a toll on Pilot, Berkshire said, and a growing consumer preference for eating at home dragged on Dairy Queen’s results.
Berkshire sold nearly 70 percent of its Apple stock last year, relinquishing more than 600 million shares, though Apple remains Berkshire’s largest equity holding. The gains from those sales helped Mr. Buffett reach a milestone in his letter. He referred to it as an American record, and said that the tax bill was $26,8 billion. This was “about 5 percent” of what corporate America paid. Buffett, 94, has been running Berkshire out of Omaha for decades. He has transformed the textile manufacturing company into a multinational conglomerate that includes a railroad, candy makers, jewelry retailers and investments in blue-chip corporations like American Express and Coca-Cola. The company’s market value surpassed $1 trillion last year. The utilities business line benefited from higher earnings from natural-gas pipelines, as well as lower estimated wildfire losses for 2024 compared to 2023. Berkshire began accumulating a stake in Japanese companies six years ago. It quickly paid off. The company paid almost $14 billion for shares with a value of over $23 billion at the end of the year. Mr. Buffett believes Berkshire will keep its Japanese holdings in place for decades. Buffett said he plans to be onstage again this year in May for Berkshire’s annual shareholder meeting, a folksy extravaganza that’s been called the “Woodstock of capitalism.” In a nod to his advancing age, he wrote that “it won’t be long” before Greg Abel, the leader of Berkshire Hathaway Energy and his designated successor, replaces him as Berkshire’s chief executive.
But Mr. Buffett, who has shown no eagerness to step down, included in his newsletter a lengthy anecdote about Pete Liegl, the founder of Forest River, a company Berkshire bought in 2005. Forest River grew to become the nation’s largest manufacturer of outdoor recreational vehicles like cargo trailers, pontoon boats, buses and vans, and it contributed “many billions,” Mr. Buffett said, to the wealth of Berkshire’s shareholders
“Pete died in November, still working at 80,” Mr. Buffett wrote approvingly.
