Berkshire Hathaway reported operating earnings fell in the fourth quarter while it was a net seller of stocks during that period, the Warren Buffett-led conglomerate disclosed Saturday.
The company reported Q4 operating earnings of $6.71 billion, down 7.9% vs. a year ago. Operating earnings reflect total profits from the businesses that Berkshire owns and operates.
For the year, Berkshire disclosed record operating earnings of $30.793 billion, up 12.2% from 2021. In an accompanying annual letter to shareholders, Buffett called 2022 a "good year" for Berkshire, despite currency, inflation and supply-chain headwinds.
Net earnings fell 54%, year over year, to $18.164 billion in Q4, and 75% to $22.819 billion for the full year. That largely reflected declines in Berkshire's Dow stocks heavy equity investment portfolio.
For 2022, the company reported a $53.61 billion loss from investments and derivatives, including an $11.46 billion gain in the year's final quarter.
Buffett's Berkshire repurchased shares to the tune of $2.855 billion in Q4, for a full-year total of $7.9 billion. That's down sharply from $27 billion in 2021 and $24.7 billion in 2020.
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Revenue and earnings for Buffett's Berkshire derive from diverse operating companies as well as its vaunted portfolio of equity investments.
Along with its earnings release Saturday, the conglomerate shared its 2022 annual report, including Buffett's famous letter to shareholders.
Berkshire Earnings From Operating Businesses
For Q4, operating earnings — Buffett's preferred measure for assessing performance — fell 8% vs. a year earlier to $6.7 billion. Excluding currency effects, operating profit would have climbed 13%.
The businesses Berkshire operates include insurance and reinsurance, utilities and energy, freight rail transportation, manufacturing and retailing.
In Q4, Berkshire earnings from insurance underwriting fell 34% to $244 million. Insurance earnings were negatively impacted by continued weakness at the Geico auto insurance segment. But Berkshire's insurance investment income swelled 64% to $2 billion.
Rail earnings fell 12.8% vs. a year earlier to $1.47 billion. Utilities and energy earnings grew nearly 24% vs. a year earlier to $739 million.
Berkshire Stock Investments
In Q4, Berkshire's sold, on net, an approximate $15 billion worth of stocks. For full-year 2022, the conglomerate's stock purchases exceeded stock sales by $34.27 billion. That was mostly tied to hefty investments in Chevron and Occidental Petroleum amid the oil price surge, partly tied to the Russia-Ukraine war.
Investors already knew that investing legend Buffett's Q4 stock buys included Apple and his Q4 stock sells included Taiwan Semiconductor, based on Berkshire's latest quarterly 13F filing.
Helped by Q4 stock sales, Berkshire's cash hoard swelled to $128.651 billion at the end of 2022 from almost $109 billion in Q3.
Warren Buffett, in his annual shareholder letter, said Berkshire Hathaway will keep holding a "boatload" of cash and Treasury bills. But he also decried critics of stock buybacks as "an economic illiterate or a silver-tongued demagogue."
BRKB Stock, Warren Buffett Stock Holdings
Class-B shares of Berkshire Hathaway eased 0.4% to 302.80 in Monday's stock market.
Heading into the Q4 earnings report, BRKB stock undercut the 50-day moving average. But Berkshire stock has held up well year to date, aided by the strength in Berkshire's energy unit and the rotation into value stocks.
