A slowing US economy did not spare Berkshire Hathaway’s first-quarter earnings, as the conglomerate reported a decline on Saturday.
The company’s net earnings decreased 53% from $11.71 billion a year earlier to $5.46 billion in the most recent period.
At $7.04 billion, Berkshire Hathaway’s operating earnings – which include profits from its many businesses, including insurance, railroads, and utilities – were flat year over year.
Key highlights of result
- The drop comes at the same time that earnings from the company’s insurance underwriting business fell nearly 94% to $47 million from $764 million a year ago.
- Berkshire Hathaway’s manufacturing, service and retailing segment earned $3.03 billion in the quarter, while railroad and utilities earnings were flat.
- For the first time since the Covid-19 pandemic began, those operating results came as the U.S. economy contracted in the first quarter.
- A broader market decline also led to a loss of $1.58 billion for the company. Buffett always tells shareholders to ignore these quarterly fluctuations in investment returns.
- “Investors who do not understand accounting can be seriously misled by figures for net earnings per share, which are often derived from investment gains (losses) in any given quarter,” Berkshire said in its release on Saturday.
- Stock buybacks slowed to $3.2 billion in the fourth quarter of 2021 from $6.9 billion, as the company made more deals than it had in a while.
- Buffett’s company announced in late March that it agreed to buy Alleghany for $11.6 billion, which marks the largest deal Buffett has made since 2016. Occidental Petroleum, which is now worth more than $7 billion, and HP Inc., which is now valued at over $4.5 billion, were also announced by Berkshire Hathaway.
While the environment has been tough, Berkshire has performed well as an investment this year. Class A shares of the conglomerate are up over 7% for the year – posting a better performance than the S&P 500, which is down 13.3%. However, the company has still amassed a massive cash hoard of $106.3 billion as of the end of the first quarter.