Warren Buffett-owned Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B) reported a sharp decline in fourth-quarter net earnings, with investment losses serving as a drag.
What Happened: Omaha, Nebraska-based Berkshire reported fourth-quarter net earnings of $18.16 billion, down about 54% from the year ago’s $39.65 billion.
The lower fourth-quarter net earnings reflected a sharp drop in investment and derivative gains, which fell about two-thirds (about 65%) from $39.65 billion in 2021 to $11.46 billion in 2022. Operating earnings, referring to income from its portfolio companies, fell by a much more modest 7.9% to $6.71 billion.
Net earnings per Class A share fell from $26,690 to $12,412.
The operating income reflected declines in income from the railroad business and losses stemming from currency translations, partly offset by an increase in insurance investment income.
For the year, Berkshire reversed to an operating loss of $22.82 billion from a profit of $89.80 billion, dragged by a $53.61 billion investment and derivate losses. Operating earnings, however, climbed from $27.46 billion to $30.79 billion.
Berkshire repurchased $2.6 billion of its shares during the fourth quarter, with the year’s tally at $7.8 billion.
See also: Is Berkshire Hathaway (BRKA) A Good Stock To Buy
Buffett Comments: In the customary annual letter to shareholders, Buffett thanked them for vesting their trust in Berkshire. He noted that Berkshire shareholders largely are “once-a-saver, always-a-saver” types, who while living well, eventually contribute to philanthropic organizations, thereby helping to improve people’s lives.
He noted he and Charlie Munger operate with the objective of making investments in businesses with both long-lasting favorable economic characteristics and trustworthy managers.
The Oracle of Omaha said Berkshire had a good year in 2022, as its operating earnings, exclusive of capital gains or losses from equity holdings, set a record at $30.8 billion. He touted the purchase of property-casualty insurer Alleghany Corp., run by Joe Brandon as the second most positive development for Berkshire in 2022.
Looking ahead, Buffett said Berkshire will always hold a “boatload of cash and U.S. Treasury bills” along with a wide array of businesses.
“We will also avoid behavior that could result in any uncomfortable cash needs at inconvenient times, including financial panics and unprecedented insurance losses,” he said. He also said Berkshire’s CEO will always be the chief risk officer and all future CEOs will have a significant part of their net worth in Berkshire shares, bought with their own money.
Berkshire's Class A shares closed Friday's session up 0.51% at $461,705, according to Benzinga Pro data.
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