Warren Buffett told investors on Saturday that Berkshire Hathaway had found his successor, giving more details than ever about the heir to the company he has run for 50 years.

"Both the board and I believe we now have the right person to succeed me as CEO – a successor ready to assume the job the day after I die or step down," the billionaire, 84, said in his annual letter to Berkshire shareholders.

"In certain important respects, this person will do a better job than I am doing," Buffett added, as Berkshire Hathaway reported a 17 per cent drop in fourth-quarter net income, coupled with an improvement in its operating results.

In previous annual letters, Buffett has said that Berkshire's board had been fully aware of his chosen successor but he kept his options open for other possible candidates.

Investors have long speculated about who would, or could, succeed Buffett, particularly after he was diagnosed with and then beat prostate cancer in 2012.

Charlie Munger, Berkshire's vice chairman, in a separate letter to shareholders characterised two top Berkshire executives, Greg Abel and Ajit Jain, as "proven performers who would probably be under-described as 'world-class.'"

Abel, 52, leads Berkshire Hathaway Energy, and Jain, 63, has been Buffett's top insurance deputy for three decades.

Munger is 91.

Neither Buffett's nor Munger's letter referred by name to Matthew Rose, executive chairman of the BNSF railroad unit, who has also been mentioned by investors as a possible successor.

In Saturday's letter, Buffett strongly suggested that the potential successor already works within Berkshire.

Buffett has run Berkshire since 1965, transforming it from a failing textile company into a conglomerate with a $363 billion market value, and more than 80 operating businesses in such areas as insurance, railroads, energy, food and apparel.

The Omaha, Nebraska-based company also has well over $100 billion of common stock investments.

"Our directors believe that our future CEOs should come from internal candidates whom the Berkshire board has grown to know well," he wrote.

Age will also be a factor and Buffett said Berkshire may be best off if his successor stays on for at least a decade.

"Our directors also believe that an incoming CEO should be relatively young, so that he or she can have a long run in the job," Buffett wrote. "It's hard to teach a new dog old tricks. And they are not likely to retire at 65 either - or have you noticed?"-Reuters