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Berkshire Hathaway Reports Drop in Earnings, Driven by Investment Losses

Berkshire Hathaway, the insurance and investing conglomerate that is run by the billionaire and investment legend Warren E. Buffett, reported on Saturday a significant drop in earnings in the first quarter.

Profits at the company, which owns a diverse array of American brands from the car insurer Geico to the ice cream chain Dairy Queen, fell to $5.4 billion. That was down 53 percent from the nearly $12 billion that it earned in the same three months a year ago. Those profits were also lower than the $6 billion that analysts had expected the company would earn in the quarter.

Much of the drop, though, was driven by Berkshire’s large stock portfolio, which lost nearly $1.6 billion in the first three months of the year, down from a gain of nearly $5 billion in the first quarter of 2021. That drop mirrored the performance of the stock market in general, which had its worst month in two years in April, and has been dragged down by investors’ fears about rising inflation and uncertainty caused by the Ukrainian war and the pandemic’s lingering impact on global supply chains.

The earnings report came out as the company was holding its annual meeting in person for the first time since the beginning of the pandemic.

Sales and profits at Berkshire’s operating businesses continued to rise in the quarter, bucking the overall contraction in the U.S. economy in the first quarter. Economists said, though, that the drop in gross domestic product hid some underlying strength in the U.S. economy, and Berkshire’s operating results seemed to back that up. Profits at Berkshire’s manufacturing and retail businesses rose 16 percent from the same period a year ago. Profits at its railroad company Burlington Northern, one of the largest freight networks in the United States, were up 9 percent, again reflecting continued business activity.

Berkshire’s mixed first-quarter results came as tens of thousands of Mr. Buffett’s loyal investors have flocked to Omaha, his hometown, for the company’s annual meeting. The Buffett-fest is a daylong folksy affair, often called “Woodstock for Capitalists,” in which Mr. Buffett spends hours answering questions in front of a packed crowd in the city’s downtown 17,000-seat arena. A giant conference room floor is filled with booths highlighting Berkshire’s many companies, and offering discounts on things like boxes of See’s Candies, also owned by Berkshire. Only shareholders can attend in person. The meeting has been virtual for the past two years. Berkshire began streaming the meeting a few years ago, and will again this year.

Mr. Buffett, 91, faces a slightly more contentious annual meeting than usual. Dissident shareholders have put up a proposal for vote that asks Berkshire to overhaul how it views and details its climate risk, something Mr. Buffett has long resisted doing.

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