Berkshire Hathaway, the conglomerate led by Warren Buffett, reported a 17 per cent increase in profits, buoyed by a mild hurricane season and investment gains. This comes as the company prepares for Greg Abel to succeed Buffett as CEO in January. Berkshire Hathaway is a diversified holding company with businesses ranging from insurance to rail, energy, and manufacturing, offering a snapshot of the US economy’s health. The firm is closely watched by investors worldwide.
Berkshire’s cash reserves reached a record $US382 billion in the third quarter, with operating earnings surging 34 per cent to $US13.5 billion. A significant factor was the insurance underwriting profit more than tripling due to unusually low disaster activity. However, Berkshire offloaded $US6.1 billion in shares during the period, suggesting Buffett is finding limited investment opportunities in the current market.
Analysts anticipate increased scrutiny from investors after Abel assumes the CEO role, particularly regarding the potential for dividend payouts given Berkshire’s substantial cash holdings. While Abel has been managing Berkshire’s non-insurance businesses since 2018, his approach to capital allocation and team management will be closely monitored. Investors may gain further insights into Abel’s plans in his first letter to shareholders or at the annual meeting next year.
In the third quarter, Berkshire’s earnings reached $US30.796 billion, or $US21,413 per Class A share, up from $US26.251 billion the previous year. Operating profit jumped to $US13.485 billion, driven by a rebound in its insurance businesses and fewer catastrophic losses compared to the previous year. While most of Berkshire’s companies performed well, profits declined at its utilities, and some weakness was noted in its retail businesses due to economic uncertainty.
