Gerald Miller | CNBC
Berkshire HathawayOperating profit fell during the fourth quarter as inflationary pressure weighed on the conglomerate’s operations.
Berkshire Hathaway’s operating profit was $6.7 billion in the fourth quarter of 2022, according to a press release on Saturday. That’s a 7.9% decrease compared to the same period last year when profits totaled $7.285 billion. Operating profit refers to the total profit from the companies owned by the conglomerate.
Revenue from Berkshire’s rail, utility and energy businesses totaled $2.2 billion in the fourth quarter of 2022, down slightly from a year ago. Meanwhile, the company’s insurance underwriting business fell to $244 million in the fourth quarter of 2022, down from $372 million a year earlier.
For the year, the conglomerate’s operating profit amounted to 30.793 billion dollars. That’s a 12.2% increase from $27.455 billion in 2021.
Meanwhile, Berkshire used $2.855 billion to buy back shares in the fourth quarter. That’s down from the same period last year when share buybacks totaled more than $6 billion but more than the third quarter’s total buybacks of about $1 billion. For the year, Berkshire bought back nearly $8 billion in common stock.
Despite this, Berkshire’s cash reserves grew to $128.651 billion in the fourth quarter of 2022. That’s up from nearly $109 billion in the third quarter.
Buffett said in its annual shareholder letter that Berkshire will continue to hold a “boatload” of cash and U.S. Treasury bills along with its myriad of businesses. He specified that future CEOs of the company will have a “significant portion” of their net worth in Berkshire stock.
“We will also avoid behavior that could result in inconvenient cash needs at inconvenient times, including financial panics and unprecedented insurance losses,” Buffett wrote. “And yes, our shareholders will continue to save and prosper by retaining profits. At Berkshire, there will be no finish line.”
Total profit fell to $18.164 billion in Q4 2022, down 54% from the same quarter a year earlier. These earnings reflect Berkshire’s fluctuating equity investments.
For the full year, total profit fell 125% to a loss of $22.819 billion in 2022, a loss of $89.795 billion in 2021. That number is largely a byproduct of the tumultuous market in 2022, where the company reported a loss of $53.6 billion USD from investments and derivatives.
Regardless, Buffett often gives little weight to changes in a company’s quarterly or annual earnings.
“The amount of investment gains/losses in a given quarter is usually meaningless and provides net earnings (losses) per share figures that can be extremely misleading to investors who have little or no knowledge of accounting rules,” read a statement from the press release .
Berkshire shares are down nearly 1.6% in 2023.