Berkshire Hathaway (BRK) earnings in the first quarter of 2022

Warren Buffett

Gerry Miller | CNBC

Warren Buffett’s Berkshire Hathaway reported a decline in first-quarter earnings Saturday as the conglomerate was not immune from a slowdown in the US economy.

The company’s net income was $ 5.46 billion, down more than 53% from $ 11.71 billion in the prior-year period.

Berkshire’s operating earnings – which include profits made from the myriad of assets owned by the conglomerate such as insurance, railways and utilities – have been stable year over year at $ 7.04 billion. This comes in a sharp decline in the company’s insurance underwriting activity; Segment earnings fell nearly 94% to $ 47 million from $ 764 million in the prior-year period.

Earnings in Berkshire’s manufacturing, services and retail segment increased 15.5% to $ 3.03 billion in the quarter, while rail and utility earnings increased slightly.

Those operating results came as the US economy contracted in the first quarter the first time since the beginning of the Covid-19 pandemic.

The company also took a hit from its investments, posting a $ 1.58 billion loss amid a broader market decline. To be sure, Buffett always advises shareholders to ignore these quarterly investment fluctuations.

“The amount of investment gains (losses) in any given quarter is usually meaningless and provides net earnings per share data that can be extremely misleading to investors who have little or no knowledge of accounting rules,” Berkshire said. in the press release 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 transactions in the final quarter than it has been in a long time. time.

In late March, the company said it agreed to buy an insurer Alleghany for $ 11.6 billion – marking Buffett’s largest deal since 2016. Berkshire also unveiled a stake in the oil giant Occidental Petroleum which is now worth more than $ 7 billionalong with a position in HP Inc which is now worth over $ 4.5 billion.

Despite the tough environment, Berkshire as an investment has been stellar this year. The conglomerate’s Class A shares were up more than 7% for the year, outperforming the S&P 500, which was down 13.3% for 2022. While down from the fourth quarter, the company still showed a whopping $ 106.3 billion cash deposit at the end of the first quarter.

The company’s latest quarterly data comes as thousands of people flocked to Omaha, Nebraska for the annual Berkshire meeting, where Buffett and Vice President Charlie Munger will answer questions from shareholders. (CNBC wants the host the exclusive live streaming Saturday starting at 9:45 am ET.)

Some of the topics Berkshire shareholders will want to discuss with the pair include their market outlook, given recent inflationary pressures and rising rates, as well as greater clarity on the company’s succession plan.

Check out all the coverage of CNBC Berkshire Hathaway’s annual meeting here.