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Berkshire Hathaway (BRK) earnings Q1 2022

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Warren Buffett’s Berkshire Hathaway reported Saturday a decline in first-quarter earnings, because the conglomerate was not proof against a slowing U.S. economy.

The corporate’s net earnings got here in at $5.46 billion, down greater than 53% from $11.71 billion within the year-earlier period.

Berkshire’s operating earnings — which encompass profits constructed from the myriad of companies owned by the conglomerate like insurance, railroads and utilities — were flat 12 months over 12 months at $7.04 billion. This comes amid a pointy drop in the corporate’s insurance underwriting business; earnings from the segment dropped nearly 94% to $47 million from $764 million within the year-earlier period.

Warren Buffett

Gerry Miller | CNBC

Earnings from Berkshire’s manufacturing, service and retailing segment jumped 15.5% to $3.03 billion within the quarter, while railroad and utilities earnings increased barely.

Those operating results got here because the U.S. economy contracted in the primary quarter for the primary time for the reason that onset of the Covid-19 pandemic.

The corporate also took a giant hit from its investments, reporting a lack of $1.58 billion amid a broader market decline. To make certain, Buffett all the time advises shareholders to disregard these quarterly investment fluctuations.

“The quantity of investment gains (losses) in any given quarter is frequently meaningless and delivers figures for net earnings per share that could be extremely misleading to investors who’ve little or no knowledge of accounting rules,” Berkshire said in Saturday’s release.

Berkshire’s stock buybacks also slowed right down to $3.2 billion from $6.9 billion within the fourth quarter of 2021, as the corporate was more lively with dealmaking last quarter than it had been for a very long time.

In late March, the corporate said it agreed to purchase insurer Alleghany for $11.6 billion — marking Buffett’s biggest deal since 2016. Berkshire also unveiled a stake in oil giant Occidental Petroleum that is now value greater than $7 billion, together with a position in HP Inc that’ now valued at greater than $4.5 billion.

Despite the tough environment, Berkshire as an investment has been stellar this 12 months. The conglomerate’s Class A stock is up greater than 7% for the 12 months — outperforming the S&P 500, which is down 13.3% for 2022. While down from the fourth quarter, the corporate still showed a large money hoard of $106.3 billion as of the top of the primary quarter.

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The corporate’s latest quarterly figures come as 1000’s flocked to Omaha, Nebraska for Berkshire’s annual meeting, where Buffett and Vice Chairman Charlie Munger will take questions from shareholders. (CNBC will host the exclusive livestream on Saturday starting at 9:45 a.m. ET.)

A number of the topics Berkshire shareholders will want the pair to debate include their market outlook — given the recent inflationary pressures and rising rates — in addition to more clarity on the corporate’s succession plan.

Try the entire CNBC Berkshire Hathaway annual meeting coverage here.

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