Berkshire Hathaway posts big loss in Q4, cash hoard swells to $130 bn

Warren Buffett’s Berkshire Hathaway on Saturday reported its highest-ever annual operating profit, even as foreign currency losses and rising interest rates contributed to lower earnings in the fourth quarter.

Buffett called 2022 a “good year” for Berkshire in his annual shareholder letter, after the conglomerate’s dozens of businesses generated $30.8 billion of profit despite rising inflation and supply chain disruptions, including from the war in Ukraine.

Berkshire also bulked up its cash hoard, ending the year with $128.6 billion after selling about $16.3 billion of stocks in the fourth quarter.

The Omaha, Nebraska-based firm found more value buying back its own shares, repurchasing $2.6 billion, and bought back about $700 million more in the first month-and-a-half of 2023.

Though its stock price is down 1.5 per cent this year, lagging the 3.4 per cent gain in the S&P’s 500, Berkshire shares outpaced the index by 22 percentage points in 2022, reflecting their status as a defensive investment in rocky markets.

Berkshire shareholders “trust us to treat their money as we do our own,” Buffett said in his letter. “And that is a promise we can make.”

Quarterly operating profit fell 8 per cent to $6.71 billion from $7.29 billion.

Net income for the quarter fell 54 per cent to $18.16 billion from $39.65 billion a year earlier. Buffett considers net results misleading because they include gains and losses on investments that Berkshire hasn’t sold.

Results also reflected a 24 per cent jump in profit from energy and utility operations, as well as Berkshire’s share of Occidental Petroleum Corp’s earnings after it built a 21.4 per cent stake in the oil company.

Berkshire also owns 20.4 per cent of American Express Co , which its financial results do not incorporate.

Berkshire did spend $11.5 billion in the fourth quarter to buy the insurance company Alleghany.