Berkshire Hathaway, led by billionaire Warren Buffett, has announced its highest-ever quarterly operating profit, reaching over $10 billion. The conglomerate also achieved an overall profit of nearly $36 billion, benefiting from gains in its stock holdings. Berkshire’s insurance business saw a significant increase in profit, up 38%, thanks to rising interest rates and improved performance from Geico car insurer. Additionally, interest and other investment income grew sixfold.
However, the rising interest rates had an adverse effect on Berkshire’s Clayton Homes and building products businesses, as well as its Forest River unit’s RV sales, resulting in a 34% decline in revenue. One of Berkshire’s largest businesses, the BNSF railroad, also experienced a 24% profit decline due to lower consumer goods shipments, competition from truckers, and increased employee wages.
Berkshire remained cautious about high stock prices as it sold $8 billion more stocks than it bought during the second quarter. The company also repurchased less of its own stock, ending June with a near-record cash amount of $147.4 billion. Analysts attribute this strategy to the impact of higher interest rates on investment income and the lack of attractive investment opportunities.
Berkshire Hathaway operates various businesses, including its namesake energy company, several industrial companies, and well-known brands like Dairy Queen, Duracell, Fruit of the Loom, and See’s Candies. Investors closely watch Berkshire’s performance as it often reflects broader economic trends.
In the second quarter, Berkshire’s quarterly operating profit rose 7% to $10.04 billion, with net income totaling $35.91 billion. The company repurchased $1.4 billion of stock, sold $12.6 billion of stocks, and reported an equity portfolio of $353 billion, with Apple accounting for about half of it. Berkshire also highlighted a $1.02 billion potential loss from wildfires at its PacifiCorp electric utility unit.
Despite strong quarterly results, organic growth trends were considered less robust. Analysts are keeping an eye on future positioning strategies that will ensure strong growth for the company without relying solely on frequent acquisitions.