On February 22, Berkshire Hathaway announced that its operating profit had reached a record high in the fourth quarter, marking the third consecutive year of growth. The boost was attributed to improved underwriting and increased investment income in its insurance divisions.
A significant portion of this income was derived from Berkshire's substantial cash reserves, which closed at a historic $334.2 billion by the end of 2024, doubling from the previous year.
In his annual letter to shareholders, Warren Buffett emphasized the company's preference for investing in businesses over holding cash. Despite acknowledging that 53% of its 189 operating businesses saw decreased earnings, he expressed satisfaction with the overall performance, crediting higher yields on U.S. Treasury bills and enhancements at Geico for the positive results.
Analyst Thomas Russo praised Berkshire's achievements, notably in its insurance operations and investments, highlighting the transformation led by Geico's CEO Todd Combs.
Berkshire's operating profit surged by 71% in the fourth quarter to $14.53 billion, reaching $47.44 billion for the entire year 2024. Additionally, the company's quarterly net income hit $19.69 billion, with annual net income totaling $89 billion, propelled by the value growth of holdings in companies like Apple and American Express.
Buffett clarified that net results may be misleading due to unrealized gains and losses on investments. The expanded cash stake in 2024 was primarily from stock sales, with Berkshire selling a significant portion of its Apple and Bank of America shares.
Amidst continuous stock sales, Berkshire repurchased only $2.9 billion of its own stock in 2024, with no further repurchases since May. Bill Smead, a Berkshire investor, noted Buffett's reluctance to pursue new investments as reflected in the lack of compelling opportunities.
While Geico reported improved underwriting profits, the overall insurance sector faced challenges, with Berkshire anticipating a $1.3 billion pre-tax impact from recent wildfires in Los Angeles. BNSF railroad and some retail businesses within the conglomerate experienced slight profit declines in 2024.
Berkshire Hathaway Energy saw a significant profit increase, driven by higher utility margins and reduced legal provisions related to wildfires. Berkshire Hathaway concluded the purchase of the remaining 8% of Berkshire Hathaway Energy.
Reflecting its diverse portfolio, Berkshire also holds industrial companies and popular consumer brands like Dairy Queen, Fruit of the Loom, and See's Candies.