Berkshire Hathaway, the conglomerate run by Warren E. Buffett, swung to a $2.6 billion loss in the third quarter, as paper losses on its vast investment portfolio and higher costs tied to weather disasters, inflation and more weighed on the company.
The earnings report highlights again how Berkshire — whose businesses include insurance, railroads, energy production and stakes in Apple, Coca-Cola, Fruit of the Loom underwear and more — is a microcosm of the American economy, and the various forces that have battered the United States this year.
The biggest drag on Berkshire’s earnings for the three months that ended Sept. 30 was a $13.5 billion markdown in the value of its investments. Mr. Buffett, one of the world’s most followed stock investors, has long warned that fluctuations in the paper value of his company’s stock holdings could overstate Berkshire’s financial health.
Going by Mr. Buffett’s preferred metric, operating earnings, Berkshire reported $7.76 billion in profit for the quarter, up nearly 20 percent from the same time a year ago.
But Berkshire also disclosed headwinds to its business on a number of fronts. The company’s enormous insurance arm reported $2.7 billion in insurance losses during the quarter tied to Hurricane Ian, compared with $1.7 billion in losses from Hurricane Ida and floods throughout Europe a year ago.
Its Geico brand reported an increase in underwriting losses, citing inflation-driven rises in property and physical damage claims.
Other parts of the company’s business empire also faced challenges from inflation. Its Burlington Northern Santa Fe railroad, one of the biggest railroad operators in the United States, reported significantly higher fuel expenses and increased compensation to employees because of wage inflation and tentative union agreements.
Its Berkshire Hathaway Energy division, a major power generator around the world, reported $1.6 billion in profit for the quarter, up slightly from the year before, though it also reported higher costs in sales and expenses.
And the economic slowdown in the United States weighed on a number of Berkshire’s divisions. Burlington Northern cited lower freight volumes as one of its challenges. Slowing sales contributed to a 75 percent drop in revenue for apparel and footwear for the quarter, with the company expecting another year-on-year drop in revenue during the holiday season.
Even the battery maker Duracell reported a drop in quarterly earnings, citing lower sales and cost inflation.
Despite the volatility in the markets, Mr. Buffett remained an active deal maker during the quarter, adding to its holdings in the oil and gas producer Occidental Petroleum among other stock bets. Some investors expect Mr. Buffett to eventually seek to buy all of Occidental, given his enthusiasm for the company’s performance and management.
Berkshire also continued to buy back its own shares, repurchasing slightly more than $1 billion worth in the quarter.