Warren Buffett’s Berkshire Hathaway has announced its second consecutive record annual operating profit. The success is attributed to the insurance business segment, which saw improved underwriting and increased income from investments due to rising interest rates. Berkshire Hathaway’s net income reached a record-breaking $96.2 billion, with the stock market surge lifting the value of the company’s $354 billion equity portfolio, including a significant stake in Apple.
While the insurance sector performed exceptionally well, not all segments of Berkshire Hathaway experienced the same level of success. The BNSF railroad and Berkshire Hathaway Energy reported declines in profits for the fourth quarter and full year. Rising costs and lower revenue impacted the railroad business, while regulatory issues and litigation affected Berkshire Hathaway Energy.
Despite the challenges faced by some business segments, Warren Buffett remains optimistic about Berkshire Hathaway’s long-term health. With an emphasis on extreme fiscal conservatism, including maintaining a record $167.6 billion cash stake, Buffett reassured investors that the conglomerate is well-positioned to weather economic uncertainties.
Operating profit for Berkshire Hathaway increased by 28% in the fourth quarter, reaching $8.48 billion, or approximately $5,884 per Class A share. The annual operating profit rose by 21% to $37.4 billion. Net income for the quarter more than doubled to $37.57 billion, or $26,043 per Class A share, surpassing the previous record set in 2021.
Warren Buffett’s investment strategy, characterized by a significant cash stake and repurchasing of Berkshire’s own stock, has proven to be successful. Despite facing challenges in making large acquisitions, Berkshire Hathaway’s cash position has allowed the company to generate more investment income amid rising interest rates. The company has been discreetly building new holdings to protect against copycat investors.
Aside from the insurance business, Berkshire Hathaway’s portfolio includes industrial parts and chemical companies, a real estate brokerage, and retail brands like Dairy Queen, Fruit of the Loom, and See’s candies. The company’s stock has outperformed the market, rising by 16% compared to the S&P 500’s 7% gain in 2024.
Warren Buffett’s Berkshire Hathaway has achieved remarkable success in its insurance business and overall operating profit. Despite challenges in some segments, the company’s strong financial performance, conservative fiscal approach, and diverse portfolio of businesses position it well for continued growth and success in the future.