Berkshire Hathaway BRK earnings Q4 2021
Warren Buffett, Chairman of Berkshire Hathaway and CEO
Andrew Harnik | AP
Berkshire HathawayOperating profits soared for the entire year and in the fourth quarter as conglomerate businesses continued to recover from the economic downturn. Warren Buffett made a bigger bet by purchasing back record numbers of Berkshire shares in 2021.
The company’s operating earnings — which encompass profits made from the myriad of businesses owned by the conglomerate like insurance, railroads and utilities — totaled $7.285 billion in the fourth quarter of 2021. It’s a 45% increase over the profit of $5.021 trillion in year-earlier.
Berkshire earned $27.455 million in operating profits for the year. This is up 25% from the $21.992 million in 2020.
Berkshire spent $6.9bn to purchase back shares during the fourth quarter. This brings the total share repurchases up to $27 billion in 2021. It’s an unprecedented amount, and more than the $24.7 million repurchased when the pandemic was in full swing in 2020. But, fourth-quarter buybacks were slower than those of $7.6 billion in third quarter.
Berkshire still had cash in excess of $146.72 million at the end 2021, despite its aggressive buybacks. This is a slight decrease from the record $149.2 million at the close of the third quarter.
Buffett explained it in his accompanying annual shareholder letterCharlie Munger, Vice Chairman of the Board, and he have found that they are not “excited” about big deals that were once their trademark. The pair instead see share repurchases the best way of deploying cash.
Buffett said in the letter, “Through this simple act, we Increase Your Share of the Many Controlled and Non-Controlled Businesses Berkshire Owns.” Buffett wrote that this is the best and most reliable way to improve your wealth if the value/price equation is perfect.
For the quarter, overall earnings, which are a result of Berkshire’s volatile equity investments, were at $39.646 million. This is a 10% increase over the $35.835 million in year-earlier periods.
Berkshire, however, tends to minimize the significance of quarterly fluctuations in investment gains and losses.
Berkshire explained that the amount of investments gains/losses is almost always meaningless. It gives figures for net earnings per stock, which can be misleading for those who don’t have a good grasp of accounting principles.
Berkshire’s utilities and energy companies saw earnings rise 12.3% from $1.995 million a year prior to reach $2.241 billion. Meanwhile, Berkshire’s insurance-underwriting business earned $372 million after losing $299 million in the fourth quarter of 2020.
As of Berkshire’s B shares broke out to a record high this year, up nearly 7%.
Total earnings for the full year were $89.795 trillion, nearly twice as much than 2020’s $42.521 billion.