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Conglomerate still reported record operating earnings for year
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Buffett takes issue with critiques of share buybacks in letter
Warren Buffett’s Berkshire Hathaway Inc. reported weaker results in some of its key businesses, underscoring fears the US economy is facing a bumpy road ahead. But that didn’t dent the billionaire investor’s optimism about America.
The conglomerate saw operating earnings fall 14% to $6.7 billion in the fourth quarter, as higher prices for materials and labor hit the firm’s rail road and insurance operations. Still, Buffett reminded investors to keep the faith in America’s economy, just as he touted Berkshire’s record operating earnings of $30.8 billion for the year.
“Despite our citizens’ penchant – almost enthusiasm – for self-criticism and self-doubt, I have yet to see a time when it made sense to make a long-term bet against America,” he said in his annual letter to shareholders published alongside its results on Saturday.
Buffett has long identified his vast collection of businesses as a proxy for the strength of the US economy, with investors combing through results or his rare public comments for any signs of strain. As elevated inflation and measures by the Federal Reserve to contain it continue to threaten economic gloom, Buffett remained optimistic about the resiliency of the US, even calling near-term economic and market forecasts “worse than useless.”
Roads, Insurers
Berkshire’s railroad business BNSF reported $1.5 billion in operating earnings in the fourth quarter, compared with $1.7 billion from the prior-year period. Meanwhile, insurance underwriting earnings fell to $244 million from $372 million.
“While customer demand for products and services was relatively good in 2022, demand began to weaken in the second half of the year at certain of our businesses,” Berkshire said in its results. “We experienced the negative effects of higher materials, freight, labor and other input costs through much of 2022.”
Prospects for the American economy — and Buffett’s own businesses – have become his preferred topics of conversa