Warren Buffett’s Berkshire Hathaway (BRK.A) announced an impressive financial performance for the fourth quarter on Saturday, highlighting a significant increase in operating earnings. The company reported a 71% rise in operating earnings after taxes year-over-year, reaching a record-breaking $14.5 billion.
Throughout 2024, Berkshire Hathaway's operating profit surged by 27%, climbing to $47.4 billion from the previous year's $37.3 billion. However, the full-year net income saw a slight decrease of 7.5%, amounting to $89 billion, a drop compared to 2023.
In his annual letter to investors, Warren Buffett expressed satisfaction with the company’s performance. “Berkshire did better than I expected,” he stated, attributing the success to a significant rise in investment income, bolstered by the improved yields on Treasury Bills and an increase in holdings of these highly-liquid short-term securities.
Berkshire Hathaway's insurance businesses made substantial contributions to the overall earnings, with car insurer Geico leading the way. The company reported an impressive $9 billion in earnings from insurance underwriting in 2024, marking a 66% increase from $5.4 billion in 2023.
Buffett credited Todd Combs for reshaping Geico over the past five years, enhancing efficiency and modernizing underwriting practices. In his letter to shareholders, Buffett highlighted these advancements as pivotal to the company’s success in the sector.
While seeking value investments, Berkshire Hathaway significantly increased its cash reserves. By the fourth quarter, the company's cash holdings reached a new high of $334.2 billion, up from $325.2 billion in the third quarter. This increase followed a strategic reduction in shares of major companies like Apple (AAPL) and Bank of America (BAC) last year. For comparison, the company held $167.6 billion in cash at the same time last year.
Warren Buffett, often referred to as the Oracle of Omaha, acknowledged the forthcoming leadership transition at Berkshire Hathaway. At 94, Buffett recognized that his tenure might soon conclude, and Greg Abel is set to succeed him as CEO. Abel will also take over the responsibility of writing the annual letters to investors.
Buffett expressed confidence in Abel, stating, “Greg shares the Berkshire creed that a ‘report’ is what a Berkshire CEO annually owes to owners. And he also understands that if you start fooling your shareholders, you will soon believe your own baloney and be fooling yourself as well.”
