Welcome, fellow financial enthusiast! Are you ready to dive into the world of one of the most iconic and successful companies in history, led by the legendary Warren Buffett? We're about to embark on a journey to understand just how much Berkshire Hathaway made last year. It's a question that goes beyond a single number, as the company's financial performance is a fascinating tapestry woven from many different businesses and investments.
Step 1: Get Ready to Unpack the Financials
Before we get to the numbers, let's understand what we're looking at. When you ask "how much did Berkshire Hathaway make?", you're not just asking about a single company. You're looking at a conglomerate, a massive holding company that owns a diverse portfolio of businesses, from insurance giant GEICO and railroad company BNSF to consumer brands like Dairy Queen and See's Candies.
So, are you ready to see how the Oracle of Omaha's empire performed in 2024? Let's start by understanding the key metrics.
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| How Much Did Berkshire Hathaway Make Last Year |
Step 2: Understand the Two Key Financial Metrics
When analyzing Berkshire Hathaway's earnings, it's crucial to differentiate between two main figures: operating earnings and net earnings. Warren Buffett himself emphasizes operating earnings as the true measure of the company's performance, as net earnings can be heavily influenced by accounting rules.
Sub-heading: Operating Earnings - The True Measure of Business Performance
This is the income generated from Berkshire's diverse collection of businesses. It's a much more stable and reliable indicator of how the underlying companies are performing, free from the volatile swings of the stock market. Think of it as the money the company makes from selling products, providing services, and running its day-to-day operations.
In 2024, Berkshire Hathaway's operating earnings were a staggering $47.4 billion, a substantial increase from the previous year's $37.4 billion. This robust performance shows the strength and resilience of its core businesses.
Sub-heading: Net Earnings - The Broader but More Volatile Picture
Net earnings, on the other hand, include the gains and losses from Berkshire's vast investment portfolio. While it's a GAAP-mandated number that provides a complete picture, it can be extremely volatile. For example, a sudden drop in the value of a key stock holding, even if Berkshire doesn't sell it, can cause a huge drop in net earnings.
For the full year of 2024, Berkshire Hathaway's net earnings attributable to shareholders were $88.99 billion. This number, while massive, was actually a decrease from the $96.22 billion reported in 2023. This is a classic example of why focusing solely on net earnings can be misleading, as we'll see in the next step.
Step 3: A Deep Dive into the Sources of Profit
Now, let's break down where those operating earnings came from. Berkshire's strength lies in its diverse segments, each contributing to the overall success.
Sub-heading: Insurance - The Engine of the Empire
Tip: Reading in short bursts can keep focus high.
Berkshire's insurance operations are its powerhouse. This segment includes companies like GEICO, General Re, and Berkshire Hathaway Primary Group. In 2024, the insurance sector saw a spectacular improvement.
Insurance Underwriting: This is the profit made from premiums collected versus claims paid. In 2024, underwriting earnings were a remarkable $9.02 billion, a significant jump from $5.43 billion in 2023. This was largely driven by a major turnaround at GEICO, thanks to improved underwriting and efficiency.
Insurance Investment Income: The insurance business generates a massive "float" - premiums collected but not yet paid out in claims. This money is invested and generates income. In 2024, this investment income surged to $13.67 billion, up from $9.57 billion in 2023, boosted by higher interest rates and increased holdings of U.S. Treasury Bills.
Sub-heading: Railroad, Utilities, and Energy - The Backbone
These segments provide a stable and predictable stream of earnings.
BNSF (Railroad): In 2024, BNSF reported operating earnings of $5.03 billion, a slight decrease from 2023's $5.09 billion.
Berkshire Hathaway Energy: This segment also saw a strong performance, with earnings of $3.73 billion in 2024, up from $2.33 billion in 2023.
Sub-heading: Other Controlled Businesses - The Retail and Manufacturing Powerhouses
This category includes a wide range of businesses, from manufacturing and services to retail. In 2024, this segment contributed $13.07 billion to operating earnings. While some of these businesses saw a decline in earnings, others performed well, showing the benefits of diversification.
Sub-heading: Non-controlled Businesses and Other - The Remaining Pieces
This includes earnings from Berkshire's stakes in companies where it has a significant, but not controlling, ownership, like Kraft Heinz and Occidental Petroleum. In 2024, earnings from these businesses were $1.52 billion.
Step 4: Decoding the Net Earnings Fluctuation
So, why did net earnings decrease even as operating earnings soared? The answer lies in the investment gains and losses.
In 2024, Berkshire reported investment gains of $41.56 billion for the full year. This is a substantial gain, but it was less than the massive gains of $58.87 billion in 2023.
The primary reason for this difference was the changes in the value of Berkshire's equity portfolio. The company made major sales of stock, including a significant reduction in its stake in Apple, which reduced the portfolio's overall value.
Therefore, while the core businesses were performing exceptionally well and generating record profits, the accounting-mandated recognition of lower unrealized gains on its stock holdings made the net earnings number appear lower year-over-year.
Step 5: Visualize the Numbers
To put it all in perspective, here's a quick summary table (in millions of USD):
Category | Full Year 2024 | Full Year 2023 Tip: Compare what you read here with other sources. | |
Operating Earnings | $47,437 | $37,350 | |
Insurance-Underwriting | $9,020 | $5,428 | |
Insurance-Investment Income
| $13,670 | $9,567 | |
BNSF | $5,031 | $5,087 | |
$3,730 | $2,331 | ||
Other Controlled Businesses | $13,072 | $13,362 | |
Non-controlled Businesses | $1,519 Tip: Break down complex paragraphs step by step. | $1,750 | |
Other | $1,395 | ($175) | |
Net Earnings | $88,995 | $96,223 |
In a nutshell, Berkshire Hathaway's core businesses had a fantastic year, driving operating earnings to record highs, even as net earnings saw a decline due to market fluctuations in its investment portfolio.
10 Related FAQ Questions
How to understand the difference between operating and net earnings?
Operating earnings reflect the profit from a company's day-to-day business operations, while net earnings include gains and losses from investments, which can be highly volatile due to market swings.
How to find Berkshire Hathaway's official financial reports?
You can find Berkshire Hathaway's official annual reports and quarterly earnings releases on its website, berkshirehathaway.com, under the "News Releases" section.
How to interpret the impact of stock sales on earnings?
When Berkshire sells stock at a profit, it recognizes a "realized gain" that is included in net earnings. When the value of its holdings increases without a sale, it recognizes an "unrealized gain." Both impact net earnings, but are not part of operating earnings.
QuickTip: Stop to think as you go.
How to know which of Berkshire's businesses performed best?
In 2024, the insurance segment, particularly GEICO, was the standout performer, with a significant increase in both underwriting and investment income.
How to track Berkshire Hathaway's cash pile?
Berkshire Hathaway's cash and cash equivalents are reported on its balance sheet in its financial statements. At the end of 2024, it reached a record of $334.2 billion.
How to understand the "float" in Berkshire's insurance business?
The float is the money collected in premiums that is not yet needed to pay out claims. Berkshire can invest this money, and in 2024, its float grew to approximately $171 billion.
How to analyze the performance of Berkshire's railroad and energy segments?
You can find a detailed breakdown of BNSF and Berkshire Hathaway Energy's earnings in the company's annual report, which provides information on revenue, expenses, and operating income for each segment.
How to understand Warren Buffett's philosophy on earnings?
Buffett believes that operating earnings are the most important metric because they show the true economic power of the businesses Berkshire owns, while investment gains are too unpredictable to be a reliable measure of performance.
How to calculate earnings per share for Berkshire Hathaway?
Earnings per share (EPS) are calculated by dividing the net earnings by the number of outstanding shares. For 2024, the net earnings per average equivalent Class A share were $61,900 and for Class B shares, it was $41.27.
How to assess the impact of interest rates on Berkshire Hathaway's earnings?
Higher interest rates lead to increased income from Berkshire's cash holdings and fixed-income investments, which was a significant factor in the surge of its insurance investment income in 2024.
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