Berkshire Hathaway has raised its cash reserves to a new level in an environment where large transactions are scarce, and the company's operating profits have also risen with the support of Warren Buffett's accumulated insurance business.
The company's cash reserves rose to $188 billion at the end of the first quarter, setting a new record set at the end of last year. Berkshire Hathaway also announced that operating profit for the first quarter was 11.2 billion US dollars, compared to 8.07 billion US dollars for the same period last year.
In February of this year, 93-year-old Buffett said there were very few deals that would give him the chance to achieve “astonishing results.” Although Berkshire Hathaway has stepped up its acquisition efforts in recent years, it is still difficult to find the kind of trump deal that has made Buffett famous, and it also has more cash on hand than they can deploy quickly.
In the absence of a deal, Berkshire Hathaway bought back its shares instead. The company said in its earnings report released on Saturday that it spent about 2.6 billion US dollars in the first quarter.
Insurance business
Despite Buffett's warning in May last year that the profits of most Berkshire Hathaway businesses would decline during the year as the US economy reached the end of an “unbelievable period,” the company recorded an increase in performance. As the business encompasses railroads, retail, construction, and energy, Berkshire Hathaway is closely watched as a barometer of the state of the US economy, particularly as inflation and interest rates remain high.
Berkshire Hathaway's insurance business profit jumped from US$911 million in the same period last year to US$2.6 billion, benefiting from the improved performance of auto insurance company Geico, a reduction in catastrophic disasters, and increased income from insurance investment. Railroad subsidiary BNSF's profit fell 8.3% in the first fiscal quarter. Berkshire Hathaway said it was due to unfavorable changes in the business structure and a decline in fuel surcharge revenue.