Berkshire Hathaway Swings to $21.66 Billion First-Quarter Profit--Update

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 [e-mail]

(END) Dow Jones Newswires

May 04, 2019 08:52 ET (12:52 GMT)

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