Berkshire Hathway Office

Berkshire Hathaway suffers losses in Q2, value of investments down

American multinational company Berkshire Hathaway on Sunday released its earnings reports for the second quarter, which ended on June 2022.

The conglomerate holding company founded by Warren Buffett posted a loss of 43.8 billion dollars in the second quarter of the  current financial year. Post-pandemic economic crisis and the Russia Ukraine Geo political situation, which commenced in February 2022, severely impacted the profit prospects of Berkshire Hathaway.

According to the company, a decrease of 53 billion dollars in the value of the investments, was the major cause of loss in the quarter.

Despite suffering a net loss in the second quarter, the investment giant led by Warren Buffett posted an operating profit of 9.283 billion dollars.

Government employees insurance company (GEICO) which is wholly owned by Berkshire Hathaway Inc. suffered losses due to shortages of automobile parts and increased accident claims during the quarter. This affected both the profit margin and operational profit of the company.

The losses from GEICO were off setted by the increased gains from the insurance and BNSF railway.

BNSF railway which is one of the  largest railroads in the North America is wholly owned by Berkshire Hathaway. BNSF was acquired by Berkshire Hathaway in 2010 for a price of 44 billion dollars.

The operational profit posted by the company in the second quarter is 38.8% more than what was posted as operational profit in the second quarter of the previous financial year. Majority of the gains came from sectors such as insurance, railroads and utilities to name a few.

According to a report by the Financial Times, during the annual shareholders meeting of Berkshire Hathaway, the chief executive officer of the company, Warren Buffett reportedly told that stock purchases made by the company on a yearly basis in large quantities would slow down as the year progress. He also reportedly said that there was a growing lethargic environment in the headquarters of the corporation.

Various economic and business analysts said that the increase in operating profits of the company despite posting losses and a decrease in the value of investments show the resilience of the multi-billion dollar company.

Since, the holding company has invested in various companies in various amounts, Warren Buffett had earlier said that most efficient way to look at the performance of Berkshire Hathaway was to look at its operating earnings. Operating earnings do not include the losses and gains from investments.

Operating earnings of the company went up from  $18,488 per Class A share to  $29,754 per Class A share in a year.