Finance

Lower tax rate fuels record profit for Buffett's Berkshire Hathaway

Key Points
  • Berkshire's fourth-quarter net income increased roughly fivefold to $32.55 billion.
  • Berkshire attributed roughly $29.11 billion of its net income to the reduction of the U.S. corporate tax rate.
  • Book value per Class A share was $211,750 at the end of the year, up 13 percent from three months earlier.
Warren Buffett
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Warren Buffett's Berkshire Hathaway on Saturday reported a record quarterly and annual profit, benefiting from a lower U.S. corporate income tax rate.

Fourth-quarter net income increased roughly fivefold to $32.55 billion, or $19,790 per Class A share, from $6.29 billion, or $3,823 per share, a year earlier.

Quarterly operating profit for the Omaha, Nebraska-based conglomerate fell 24 percent to $3.34 billion from $4.38 billion.

Berkshire attributed roughly $29.11 billion of its net income to the reduction of the U.S. corporate tax rate, to 21 percent from 35 percent, that President Donald Trump signed into law in December.

Book value per Class A share, which reflects assets minus liabilities and which Buffett considers a good yardstick for Berkshire's intrinsic worth, was $211,750 at the end of the year, up 13 percent from three months earlier.

This also benefited from the tax law change.

For all of 2017, Berkshire's net income rose 87 percent to $44.94 billion. Operating profit, however, fell 18 percent to $14.46 billion, hurt by a rare loss from insurance underwriting.

Berkshire's Class A shares closed at $304,020.01 on Friday, and its Class B shares closed at $202.76. Both are up a little over 2 percent this year, but are down nearly 7 percent from
their record highs set on Jan. 29.