Here's our initial take on Berkshire Hathaway's (NYSE: BRK.B) (NYSE: BRK.A) fiscal 2025 first-quarter financial report.
Key Metrics
| 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 |
Market Movements Cloud Quarterly Numbers
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.
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.
Status Quo Among the Operating Units
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.
Earnings at Berkshire's energy unit were up 52% to $1.1 billion, while BNSF Railway was roughly flat, and its manufacturing, service, and retail operations were down slightly.
Immediate Market Reaction
Berkshire is unique in that it reports on a Saturday, so there is no immediate market reaction to report. That's by design. Warren Buffett chooses to release earnings over the weekend to prevent a knee-jerk reaction from the market, preferring instead for investors to have time to digest the results before trading resumes.
What to Watch
Saturday's release coincides with "Woodstock for Capitalists," the highly attended Berkshire Hathaway annual meeting in Omaha, Nebraska. Buffett, as is his custom, is expected to spend hours on stage answering questions about the company, the economy, or whatever else is on attendees' minds.
In its earnings report, Berkshire Hathaway said that "considerable uncertainty remains" on topics including tariffs and trade wars, and investors will be eager to hear any wisdom the "Oracle of Omaha" has on these topics.
There is also the question of Berkshire's massive cash pile -- now up to nearly $348 billion -- and what the company plans to do with it. Investors have been waiting for a big deal for years now, and with equity markets faltering, any comments made about how appealing acquisitions look would be of interest.
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Lou Whiteman has positions in Berkshire Hathaway. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool has a disclosure policy.
