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Berkshire Hathaway missed earnings estimates, but the number is highly influenced by stock market movements and does not reflect the health of the business.
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Operating earnings, a better snapshot of what is going on inside the business units, was down 14% due largely to insurance payouts and foreign currency fluctuations.
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Berkshire did not repurchase any shares in the quarter and ended the period with $347.7 billion in cash.
Here’s our initial take on Berkshire Hathaway‘s (NYSE: BRK.B) (NYSE: BRK.A) fiscal 2025 first-quarter financial report.
|
Metric |
Q1 2024 |
Q1 2025 |
Change |
vs. Expectations |
|---|---|---|---|---|
|
Revenue |
$89.9 billion |
$89.7 billion |
-0.2% |
Missed |
|
Earnings per share (Class B) |
$5.88 |
$2.13 |
-64% |
Missed |
|
Operating earnings |
$11.2 billion |
$9.6 billion |
-14% |
n/a |
|
Cash and short-term investments |
$334.2 billion |
$347.7 billion |
4% |
n/a |
Berkshire Hathaway’s earnings per share fell 64% year over year, missing Wall Street estimates. But it is worth noting that many Berkshire followers — and Warren Buffett himself — caution against investors relying too heavily on it. This quarter is a good example of why that is the case.
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Berkshire is a mix of operating businesses and a massive investment portfolio. Under accounting rules, the company must include unrealized gains and losses from that stock portfolio. That means the company has to report losses in a weak stock market even if it hasn’t sold the stocks.
In the first quarter of 2024, Berkshire booked $1.5 billion in “gains” from its investments. This quarter, on the other hand, that same portfolio recorded a $5 billion “loss.” Berkshire Hathaway was a net seller of $1.5 billion of equity securities in the quarter.
Other metrics look better. Berkshire Hathaway grew its Q1 cash balances by 4%, or $13 billion, over the past year. The company did not repurchase any shares during the first quarter of 2025.
Berkshire’s actual operating businesses did post a slowdown, but it wasn’t nearly as dramatic as the per-share number would suggest. The company generated $9.6 billion in operating earnings in the quarter, down 14% from $11.2 billion a year ago. Nearly $1 billion of that decline is foreign exchange losses and income from investments not directly owned by Berkshire.
The company’s massive insurance business produced mixed results, with underwriting earnings cut in half but investment income up slightly. Insurance companies have reported soft results this quarter due to payouts related to the California wildfires and other natural disasters.
