Berkshire Hathaway, the Warren E. Buffett-led conglomerate, posted net income of $ 11.7 billion in the first quarter on Saturday and made a gain on a loss of $ 49.7 billion a year ago as the paper value its investment income increased.
Using Berkshire’s preferred financial metric, operating income, the company grew nearly 19 percent year over year as its numerous subsidiaries – from power generation to the Burlington Northern Santa Fe Railroad to consumer brands – improved their performance.
Among the companies that saw the biggest improvements was the railroad, which benefited from higher freight volumes as the American economy recovered from the pandemic. Berkshire’s construction products and consumer subsidiaries also saw higher sales as home construction and retail purchases increased.
However, other parts of Mr. Buffett’s empire continued to suffer, particularly industrial manufacturers like Precision Castparts, whose aerospace parts were less in demand due to the decline in travel associated with Covid.
Berkshire’s extensive insurance business painted a mixed picture. Geico auto insurance claims declined in the quarter, although other parts of the insurance business were impacted by increased claims related to the devastating North American winter storm in February.
Berkshire posted capital gains of $ 2.8 billion for the quarter, compared to losses of $ 54.5 billion in the 2020 quarter.
The conglomerate also repurchased $ 6.6 billion in shares during the quarter as Mr Buffett continues to spend his company’s enormous cash supply – currently more than $ 145 billion – on buying back Berkshire stocks rather than making large acquisitions to do.
The earnings report came hours before Berkshire prepared for its annual investor meeting, when Mr. Buffett’s loyal supporters flew to the company’s hometown, Omaha, Neb., For decades to celebrate one of the world’s most famous investors.
However, this year it will be held virtually again to bow to the pandemic and collect restrictions. And for the first time, it’s not in Omaha, but in Los Angeles, where Charles T. Munger, Berkshire’s 97-year-old vice chairman, lives.
Annual meetings in Berkshire are known for providing a forum for the company’s shareholders to ask 90-year-old Mr. Buffett for their thoughts.
Topics expected this year include multi-year topics such as politics, potential takeover targets for Berkshire, and succession as CEO once he steps down. Questions also arise about how the conglomerate’s stock performance can be improved – it has outpaced the S&P 500 for the past five years.
Investors are also likely to ask about topics that are more uncomfortable for Mr. Buffett, such as efforts to get American companies to take more action on environmental and social issues. Mr Buffett urged shareholders this year to turn down proposals to force Berkshire to report more on its subsidiaries’ efforts to combat climate change and workplace diversity, and ask questions about whether its approach is inconsistent.