Berkshire Hathaway posts drop in net income, but maintains solid operating profit growth 📊

Warren Buffett's conglomerate Berkshire Hathaway (BRKA.US) reported a slowdown in operating profit growth in the second quarter. Despite this, the company is showing solid financial results and maintaining a strong market position.

Operating profits rose 15.5% year-on-year to $11.6 billion. While this is below the robust growth of the first quarter, it still represents solid momentum. Net income, on the other hand, fell 15.5% to $30.35 billion, mainly due to one-time factors.

The insurance sector again proved to be a locomotive of growth. GEICO, one of the largest U.S. insurance companies, reported a significant improvement in operating profit, which came in at $1.79 billion, almost triple the year-earlier figure. The absence of major natural catastrophes during the period further supported the segment's performance. 

Berkshire Hathaway's investments results turned out to be mixed. On the one hand, the value of the investment portfolio increased, and the company increased its holdings in some companies, such as American Express and Bank of America. On the other hand, a significant decline in the value of Apple shares negatively affected the overall investment performance. It was the investment segment that saw the largest decline in net income, down 28% year-on-year, ending at $18.7 billion. 

The biggest surprise to the markets was Berkshire's decision to reduce its stake in Apple by so much. Compared to the previous quarter, Berkshire reduced its position by 37.8% to $84.2 billion. This means that the company sold about 400 million shares from a position of 789 million shares at the end of Q1, a reduction of almost 50% in volume. 

The conglomerate itself has been selling off shares for seven quarters, but the pace of sales in the last two quarters has increased markedly. In total, Berkshire has already sold shares worth more than $90 billion in 2024. Below are the changes in Berkshire's major positions: 

• American Express (AXP) - up 1.7% to $35.1 billion from $34.5 billion.
• Apple (AAPL) - down 37.8% to $84.2 billion from $135.4 billion.
• Bank of America (BAC) - up 4.8% to $41.1 billion from $39.2 billion.
• Coca-Cola (KO) - up 4.1% to $25.5 billion from $24.5 billion.
• Chevron (CVX) - down 4.1% to $18.6 billion from $19.4 billion.

After the opening, Berkshire's stock price plunged along with the overall market, however, the stock is recovering and now after the first hour of trading the loss has narrowed from 10% to 4%. 

Source: xStation