Warren Buffett.
Gerald Miller | CNBC
Berkshire Hathaway‘s operating profits fell through the fourth quarter as inflationary pressures weighed on the conglomerate’s businesses.
Berkshire Hathaway’s operating earnings totaled $6.7 billion within the fourth quarter of 2022, a release read Saturday. That is down 7.9% from the year-earlier period when profits totaled $7.285 billion. Operating earnings refers to the overall profits constructed from the companies owned by the conglomerate.
Earnings from Berkshire’s railroad, utilities and energy businesses got here in at $2.2 billion within the fourth quarter of 2022, which is barely down from the year-ago period. Meanwhile, the firm’s insurance-underwriting business fell to $244 million within the fourth quarter of 2022, down from $372 million the year-earlier period.
For the 12 months, the conglomerate’s operating earnings totaled $30.793 billion. That is up 12.2% from $27.455 billion in 2021.
Meanwhile, Berkshire used $2.855 billion to purchase back shares within the fourth quarter. That is lower than the year-earlier period when share repurchases totaled greater than $6 billion but greater than the third quarter’s repurchase total of around $1 billion. For the 12 months, Berkshire bought back nearly $8 billion in common stock.
Despite this, Berkshire’s money hoard grew to $128.651 billion within the fourth quarter of 2022. That is up from nearly $109 billion within the third quarter.
Buffett said in his annual shareholder letter that Berkshire will proceed to carry a “boatload” of money and U.S. Treasury bills together with its myriad of companies. He specified that future CEOs in the corporate could have a “significant part” of their net value in Berkshire shares.
BRK in 2023
“We can even avoid behavior that would end in any uncomfortable money needs at inconvenient times, including financial panics and unprecedented insurance losses,” Buffett wrote. “And yes, our shareholders will proceed to avoid wasting and prosper by retaining earnings. At Berkshire, there will probably be no finish line.”
Overall earnings dropped to $18.164 billion within the fourth quarter of 2022, a 54% decline from the identical quarter within the 12 months prior. These earnings reflect Berkshire’s fluctuating equity investments.
For the complete 12 months, overall earnings tumbled 125% to a lack of $22.819 billion in 2022, down from earnings of $89.795 billion in 2021. That number is essentially a byproduct of tumultuous 2022 market, with the corporate reporting a $53.6 billion loss from investments and derivatives.
Regardless, Buffett often gives little weight to changes within the firm’s quarterly or annual results.
“The quantity of investment gains/losses in any given quarter is generally meaningless and delivers figures for net earnings (losses) per share that may be extremely misleading to investors who’ve little or no knowledge of accounting rules,” read a press release from the discharge.
Berkshire shares are down nearly 1.6% in 2023.
