Berkshire profit down 64%; Buffett sells Apple shares

OMAHA, Nebraska: Berkshire Hathaway’s first-quarter profits plummeted along with the paper value of its investments, but the company said Saturday (Sunday in Manila) that most of the businesses it owns outright performed well.

The company reported a $12.7-billion profit, or $8.825 per Class A share, in the quarter. That’s roughly one-third of last year’s $35.5 billion, or $24,377 per A share.

The figures were heavily influenced by a large drop in the paper value of Berkshire’s investments. Buffett encourages investors to pay more attention to the conglomerate’s operating earnings that exclude the investment figures. Operating earnings jumped 39 percent to $11.222 billion from last year’s $8.065 billion as its insurance companies showed strong results.

Michelle King of San Francisco does yoga at the See’s Candy booth before the arrival of shareholders for the Berkshire Hathaway annual meeting on Sunday, May 5, 2023, in Omaha, Nebraska. AP PHOTO

On a per-share basis, this year’s first-quarter operating figure amounts to $7,796.47 per Class A share, beating three analysts’ estimates by FactSet Research, who predicted $6,701.87 per Class A share.

Buffett was a net seller of $17 billion in stocks during the quarter, including trimming about 13 percent of Berkshire’s massive Apple stake. At $135.4 billion, the iPhone maker still accounts for the biggest share of Berkshire’s $364-billion portfolio. Buffett said he expects it to remain so even up to when his successor Greg Abel takes over.

The estimated value of Berkshire’s Apple stake suggests Buffett sold off more than 100 million shares. In the past, Buffett has said he invested in Apple’s stock because of how devoted consumers are to the company’s products, similar to consumer brands he loves like Berkshire’s own See’s Candy.

Apple Chief Executive Officer Tim Cook, who was at the Berkshire meeting, told CNBC that he still considers it a privilege to have Berkshire as a major shareholder, and he knew about the sales before Berkshire disclosed them on Saturday.

Berkshire reported a $2.6-billion underwriting profit at its insurers, up from $911 million a year ago, as Geico, in particular, continued to improve its results. However, BNSF railroad’s profits dropped 8 percent to $1.143 billion.

Most of Berkshire’s many other companies delivered solid results, including a 72-percent jump in operating profits at the utility unit, adding $717 million to Berkshire’s total.

Revenue grew 5 percent to $89.87 billion in the quarter. The two analysts who reported estimates to FactSet predicted $87.044 billion.

With no major acquisitions in sight, Berkshire’s cash pile climbed to a record $188.993 billion even after it spent $2.6-billion repurchasing shares during the first three months of the year. Holdings including Geico insurance, BNSF railroad, several major utilities and an assortment of dozens of others keep generating mountains of cash.

“We’d love to spend it but we won’t spend it unless we’re doing something with very little risk that will make us a lot of money,” Buffett said.