Buffett to report record quarterly profit for Berkshire Hathaway

Mr Warren Buffett, the billionaire investor, has said his Berkshire Hathaway conglomerate made record operating profits of $1.7 billion (€1.5 billion) in the first quarter, more than twice that of the year ago quarter, helped by a jump in earnings from its insurance businesses.

"It's the best earnings we've ever had," Mr Buffett (72), told more than 15,000 shareholders packed into Omaha's Civic Auditorium for Berkshire's annual meeting. Berkshire, which made a record annual operating profit of $3.9 billion in 2002, is scheduled to report first-quarter results this Friday.

Berkshire now has about $16 billion in cash on its balance sheets, Mr Buffett said. At the end of last year, Berkshire was holding $10 billion in cash.

Mr Buffett was downbeat on the stock market, as he has been for some time. "I have not thought stocks were cheap for quite some years," he said.

Mr Buffett, who made large corporate bond purchases last year, said that market was no longer as attractive as more buyers had flooded the market. "If there's nothing smart to do, cash is the default option," he said.

Mr Buffett elaborated on some recent moves which have puzzled some observers. Commenting on his $1.5 billion purchase of McLane, Wal-Mart Stores grocery delivery unit, announced on Friday, Mr Buffett said: "It's a narrow margin business. But McLane knows how to do it."

Mr Buffett was coy on his recent buildup of a stake in China's PetroChina, "We think we understand the oil business in China reasonably well," he said. "We don't make any great judgments about China."

On the subject of corporate governance, Mr Buffett said that by next year's meeting, Berkshire would probably have appointed some more independent directors in order to meet proposed rules on board membership.

Meanwhile, American shareholders are registering their distress about excessive executive pay in ever greater numbers. Accounting regulators are proposing changes to the treatment of stock option costs. Even some executives are renouncing bonuses and reining in benefits.

Yet although executive compensation was one of the first targets that critics of corporate America attacked after the spate of scandals last year, it is still proving the toughest to reform.

Activists say the laborious task of turning round the supertanker of increasing executive salaries, bonuses and benefits has barely started.

What is more, they fear that when the markets rebound and the economy improves, executives, boards and big private shareholders will decide they do not need to change course after all.

The past few weeks have brought both good and bad news for those who advocate change.

Meanwhile, at annual meetings across the US, activist shareholders have won majorities, or near-majorities, for resolutions on compensation, stock options and severance benefits.- (Reuters)