Berkshire Hathaway's (BRK.B) operating profits fell in the fourth quarter of 2022 due to inflationary pressures. The conglomerate's operating earnings totaled $6.7 billion, down 7.9% from the same period in the previous year. Earnings from the company's railroad, utilities, and energy businesses slightly declined, while its insurance-underwriting business saw a significant fall. Despite this, the operating earnings for the year increased by 12.2% to $30.793 billion. Berkshire used $2.855 billion to buy back shares in the fourth quarter, and its cash hoard grew to $128.651 billion.
Overall earnings declined to $18.164 billion in the fourth quarter of 2022, reflecting the company's fluctuating equity investments. Despite the decline in earnings, Berkshire plans to hold a "boatload" of cash and U.S. Treasury bills while continuing to invest in its businesses. Future CEOs in the company will also have a "significant part" of their net worth in Berkshire shares.
Why it matters
Despite the losses, Buffett encouraged shareholders to look at the bigger picture and focus on the long-term health of Berkshire Hathaway, which includes investments in major companies like Coca-Cola and American Express. Berkshire’s vast business empire is often seen as a microcosm of American industry. And many of its subsidiaries reported being hurt by the broader economic forces affecting the country.