Warren Buffett
Gerry Miller | CNBC
Warren Buffett’s Berkshire Hathaway on Saturday reported a drop in first-quarter earnings as the group was not immune to a slowing U.S. economy.
The company’s net income came in at $5.46 billion, down more than 53 percent from $11.71 billion in the same period last year.
Berkshire’s operating income — which includes profits from a multitude of group-owned businesses such as insurance, railroads and utilities — was flat from last year at $7.04 billion. . This happened in the context of a sharp decline in the company’s underwriting business; Segment earnings fell nearly 94% to $47 million from $764 million in the same period last year.
Berkshire’s manufacturing, services and retail income rose 15.5% to $3.03 billion in the quarter, while railroad and utility income rose slightly.
Those performance results come as the US economy contracted in the first quarter for for the first time since the outbreak of the Covid-19 pandemic.
The company also took a big hit from its investments, reporting a loss of $1.58 billion amid a widespread market decline. To be sure, Buffett always advises shareholders to ignore these quarterly investment fluctuations.
“Investment gains (losses) in any given quarter are often meaningless, and providing figures for net earnings per share can be extremely misleading to investors,” Berkshire said. investors with little or no understanding of accounting rules,” Berkshire said in a statement on Saturday.
Berkshire’s share buybacks also fell to $3.2 billion from $6.9 billion in the fourth quarter of 2021, as the company was more active with trading last quarter than it has been in the past.
At the end of March, the company said it had agreed to acquire the insurance company Alleghany with $11.6 billion – marks Buffett’s biggest deal since 2016. Berkshire also revealed a stake in the oil giant Occidental Oil is now worth more than 7 billion dollarswith a position in HP Inc is now worth more than 4.5 billion USD.
Despite the difficult environment, Berkshire as an investment has been wildly successful this year. The group’s Class A stock is up more than 7% for the year – outperforming the S&P 500, which is down 13.3% for 2022. While down from the fourth quarter, the company still shows some cash. huge amount to 106.3 billion USD by the end of the year. of the first quarter.
The company’s latest quarterly numbers come as thousands flock to Omaha, Nebraska, for Berkshire’s annual meeting, where Buffett and Vice Chairman Charlie Munger will answer questions from shareholders. (CNBC will organize exclusive live stream on Saturdays, starting at 9:45 a.m. ET.)
Some of the topics Berkshire shareholders will want the two to discuss include their market outlook – given recent inflationary pressures and rising rates – as well as more clarity on the company’s succession plans. .
See all the news about the CNBC Berkshire Hathaway annual meeting this.
