Gerry Miller | CNBC
Warren Buffett’s Berkshire Hathaway reported lower first-quarter earnings on Saturday as the conglomerate was not immune to a slowing U.S. economy.
The company’s net profit was $5.46 billion, down more than 53% from $11.71 billion a year earlier.
Berkshire’s operating profits – which encompass earnings from the myriad of businesses owned by the conglomerate like insurance, railroads and utilities – were flat year-over-year at 7 .04 billion. This comes amid a sharp decline in the company’s insurance underwriting business; segment profits fell nearly 94% to $47 million from $764 million a year earlier.
Profits for Berkshire’s manufacturing, services and retail segment jumped 15.5% to $3.03 billion in the quarter, while profits for railroads and utilities increased slightly.
These 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 was also hit hard by its investments, posting a $1.58 billion loss amid a broader market decline. Admittedly, Buffett still advises shareholders to ignore these quarterly fluctuations in investments.
“The amount of investment gains (losses) in a given quarter is generally meaningless and provides net earnings per share figures that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire said in Saturday’s statement.
Berkshire’s 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 deals last quarter than it expected. had been for a long time.
In late March, the company announced it had agreed to buy insurer Alleghany for $11.6 billion, which is Buffett’s biggest deal since 2016. Berkshire also unveiled a stake in oil giant Occidental. Petroleum which is now worth over $7 billion, as well as a position in HP Inc.’ now valued at over $4.5 billion.
Despite the challenging environment, Berkshire as an investment has been stellar this year. The conglomerate’s Class A shares rose more than 7% for the year, outperforming the S&P 500, which is down 13.3% for 2022. Although down from the fourth quarter, the company posted still a huge cash hoard of $106.3 billion at the end. of the first trimester.
The company’s latest quarterly figures come as thousands traveled to Omaha, Nebraska, for Berkshire’s annual meeting, where Buffett and Vice Chairman Charlie Munger will take questions from shareholders. (CNBC will host the exclusive livestream on Saturday starting 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 more clarity on the company’s succession plan.
Check out all the coverage from CNBC’s Berkshire Hathaway Annual Meeting here.