Warren Buffett’s Berkshire Hathaway reported a decline in first-quarter profit on Saturday as the conglomerate was not immune to the slowdown in the US economy.
The company’s net earnings came in at $5.46 billion, down more than 53% from $11.71 billion in the same period a year earlier.
Berkshire’s operating profit, which encompasses profits made from the myriad of businesses owned by the conglomerate such as insurance, rail and utilities, was flat year-over-year at $7.04 billion. This comes amid a sharp decline in the company’s insurance underwriting business; segment profit fell nearly 94% to $47 million from $764 million in the prior year period.
Gerry Miller | CNBC
Berkshire’s manufacturing, services and retail segment profits rose 15.5% to $3.03 billion in the quarter, while rail and utilities profits rose slightly.
Those operating results came as the US economy contracted in the first quarter for the first time since the start of the Covid-19 pandemic.
The company also took a big hit for its investments, reporting a $1.58 billion loss amid a broader market decline. To be sure, Buffett always advises shareholders to ignore these quarterly investment fluctuations.
“The amount of investment earnings (losses) in a given quarter is generally meaningless and yields net earnings per share figures that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire said in the Saturday statement.
Berkshire share buybacks also slowed to $3.2 billion from $6.9 billion in the fourth quarter of 2021, as the company was more active in trading last quarter than it had been for a long time.
In late March, the company said it agreed to buy insurer Alleghany for $11.6 billion, marking Buffett’s biggest deal since 2016. Berkshire also revealed a stake in oil giant Occidental Petroleum now worth more than $ 7 billion, along with a position in HP Inc which is now valued at more than $4.5 billion.
Despite the tough environment, Berkshire as an investment has been stellar this year. The conglomerate’s Class A shares are up more than 7% for the year, outperforming the S&P 500, which is down 13.3% for 2022. While it was down from the fourth quarter, the company still showed a huge cash reserve of $106.3 billion at the end. of the first trimester.
The company’s latest quarterly figures are released as thousands of people flocked to Omaha, Nebraska, for Berkshire’s annual meeting, where Buffett and Vice Chairman Charlie Munger will answer questions from shareholders. (CNBC will present the exclusive live broadcast on Saturday beginning at 9:45 a.m. ET.)
Some of the topics Berkshire shareholders will want the pair to discuss include their market outlook, given recent inflationary pressures and rising rates, as well as greater clarity on the company’s succession plan.
See all coverage of the CNBC Berkshire Hathaway Annual Meeting here.