Berkshire Hathaway Swings to $21.66 Billion First-Quarter Profit--Update
May 04 2019 - 8:07AM
Dow Jones News
By Nicole Friedman
Warren Buffett's Berkshire Hathaway Inc. swung to a
first-quarter profit, thanks in part to higher insurance investment
income.
Still, Berkshire's earnings excluded its share of earnings from
its 27% stake in Kraft Heinz Inc., because Kraft Heinz hasn't yet
filed its earnings with the Securities and Exchange Commission,
Berkshire said in a press release. Write downs at Kraft Heinz
weighed on Berkshire's performance in the fourth quarter of
2018.
Berkshire and private-equity firm 3G Capital formed Kraft Heinz
when they merged their H.J. Heinz Co. with Kraft Foods Group Inc.
in 2015. Mr. Buffett said earlier this year that he overpaid for
Kraft in that deal but didn't plan to sell.
Berkshire's results were released Saturday morning ahead of the
company's widely attended annual meeting in Omaha, Neb.
Berkshire reported first-quarter net earnings of $21.66 billion,
or $13,209 per Class A share equivalent, from a loss of $1.14
billion, or $692 a share, in the year-earlier period. Last year's
first-quarter earnings swung to a loss due to unrealized investment
losses.
Operating earnings, which exclude some investment results, rose
to $5.56 billion from $5.29 billion in the year prior.
Berkshire bought back $1.7 billion of its own shares in the
first quarter, the company said. Berkshire changed its buyback
policy last year, and some shareholders have said they would like
the company to spend significantly more cash repurchasing its
stock.
The conglomerate runs a large insurance operation as well as
railroad, utilities, industrial manufacturers and retailers. Its
holdings include recognizable names like Dairy Queen, Duracell,
Fruit of the Loom, Geico and See's Candies.
Berkshire's insurance business sits at the core of its
moneymaking machine. Insurance brings in billions of dollars of
"float," upfront premiums customers pay and that Berkshire invests
for its own gain. Berkshire also holds large stock investments,
including in Apple Inc. and Wells Fargo & Co. On Thursday, Mr.
Buffett told CNBC that one of his portfolio managers has bought
Amazon.com Inc. shares for Berkshire.
Class A shares closed Friday at $327,765, up 7.1% for the
year.
The 88-year-old Mr. Buffett, whose shrewd investments have
earned him the nickname "the Oracle of Omaha," still has plenty of
cash on hand for future acquisitions as a way to drive profit.
Berkshire held about $114 billion in cash at the end of the first
quarter, up from almost $112 billion at the end of 2018.
Earlier this week, Berkshire invested $10 billion in Occidental
Petroleum Corp.'s bid to buy Anadarko Petroleum Corp.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
May 04, 2019 08:52 ET (12:52 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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