The slide in U.S. stock prices punished Berkshire Hathaway Inc's (BRKa.N) bottom line in the second quarter as the company run by billionaire Warren Buffett posted a $43.8 billion loss.
Berkshire nevertheless generated nearly $9.3 billion of profit from its operating businesses, as improvement from reinsurance and the BNSF railroad offset a loss at the Geico car insurer, where car parts shortages and higher vehicle prices boosted losses from accidents.
Rising interest rates and dividend payouts helped Berkshire's insurance units generate more money from investments, while the strengthening U.S. dollar boosted profit from the company's European and Japanese debt investments.
Berkshire also slowed purchases of its stocks, including its own, though it ended June with $105.4 billion of cash and equivalents it could still deploy.
"It shows the fickle nature of markets," said Tom Russo, a partner at Gardner, Russo & Quinn in Lancaster, Pennsylvania, who invests more than $8 billion, of which 17% is in Berkshire. "It's business as usual at Berkshire Hathaway."
Investors closely watch Berkshire because of Buffett's reputation, and because results from the Omaha, Nebraska-based conglomerate's dozens of operating units often mirror broader economic trends.
Berkshire owns dozens of businesses, including steady earners such as its namesake energy company, several insurers and industrial companies, and familiar consumer brands such as Dairy Queen, Duracell, Fruit of the Loom and See's Candies.
In its quarterly report, Berkshire said "significant disruptions of supply chains and higher costs have persisted" as new COVID-19 variants emerge and because of geopolitical conflicts including Russia's invasion of Ukraine.
But it said direct losses to the company have not been material, despite the impact of higher costs for materials, shipping and labor.
Net results suffered from Berkshire's $53 billion of losses from investments and derivatives.
Stocks of three major holdings -- Apple Inc (AAPL.O), Bank of America Corp and American Express Co (AXP.N) -- each fell more than 21%, compared with a 16% decline in the Standard & Poor's 500 (.SPX).
Accounting rules require Berkshire to report the losses with its results even if it buys and sells nothing.
Buffett urges investors to ignore the fluctuations, and Berkshire will make money if stocks rise over time.
In 2020, for example, Berkshire lost nearly $50 billion in the first quarter as the pandemic took hold, but made $42.5 billion for the full year.
The quarterly net loss was equal to $29,754 per Class A share, and compared with a net profit of $28.1 billion, or $18,488 per Class A share, a year earlier.
Berkshire's $9.28 billion of operating profit, or about $6,326 per Class A share, rose 39% from $6.69 billion, or $4,424 per Class A share, a year earlier. Currency gains on foreign debt totaled $1.06 billion.
Geico's $487 million pre-tax loss was more than offset by a $976 million pre-tax gain in property and casualty reinsurance, and a 56% jump in after-tax in insurance investment income to $1.91 billion.
Profit rose 10% at BNSF, with higher revenue per car from fuel surcharges partially offsetting lower freight volumes and higher fuel costs, while profit from Berkshire Hathaway Energy rose 4%.
Berkshire repurchased just $1 billion of its own stock, down from $3.2 billion in the first quarter, and compared with $51.7 billion in 2020 and 2021.
Its $6.15 billion of stock purchases fell from $51.1 billion in the first quarter, when it took major stakes in oil companies Chevron Corp and Occidental Petroleum Corp .
Berkshire expects to complete its $11.6 billion takeover of insurance company Alleghany Corp (Y.N) in the fourth quarter.