10-KPeriod: FY2014

BERKSHIRE HATHAWAY INC Annual Report, Year Ended Dec 31, 2014

Filed March 2, 2015For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. reported strong financial performance for the fiscal year ended December 31, 2014. The company's diversified business model, spanning insurance, railroads, utilities, manufacturing, service, retailing, and finance, contributed to robust revenue growth and profitability. Key drivers included solid underwriting gains in the insurance sector, increased earnings from the railroad and utilities segments, and continued growth across manufacturing, service, and retailing operations. Despite a notable increase in investment and derivative gains, the company's core operating businesses demonstrated resilience and growth, underscoring the effectiveness of its decentralized management approach and strategic capital allocation. Berkshire Hathaway maintained a strong financial position with total assets of $526.2 billion and shareholders' equity of $240.2 billion at year-end. The company continued to manage its capital effectively, focusing on maintaining significant liquidity and pursuing opportunities for share repurchases within its established parameters. The filing also highlights the company's ongoing investments in its various businesses, including capital expenditures for infrastructure and operational improvements, reflecting a commitment to long-term value creation.

Financial Highlights

30 data points
Beta

Revenue

$194.70B

Net Income

$19.87B

10.2% Net Margin

Total Assets

$525.87B

Cash & Equivalents

$60.03B

Free Cash Flow

$16.82B

Financial Statements
Beta
Revenue$194.70B
Operating Expenses$166.57B
Interest Expense$3.25B
Net Income$19.87B
Shares Outstanding (Basic)1.64M

Key Highlights

  • 1**Diversified Business Strength:** Berkshire Hathaway's diverse portfolio, including insurance, railroads, utilities, manufacturing, services, retailing, and finance, demonstrated broad-based strength, contributing to overall revenue growth.
  • 2**Solid Insurance Underwriting:** The insurance segment reported significant underwriting gains, benefiting from a lack of major catastrophe losses in 2014 compared to the prior year.
  • 3**Railroad and Utilities Growth:** BNSF railroad operations saw increased revenues and earnings, despite some service challenges, while utilities and energy businesses experienced substantial earnings growth driven by acquisitions and operational performance.
  • 4**Manufacturing, Service, and Retailing Expansion:** These segments collectively showed robust revenue and earnings growth, supported by bolt-on acquisitions and operational improvements.
  • 5**Strong Financial Position:** The company maintained a strong balance sheet with total assets of $526.2 billion and shareholders' equity of $240.2 billion, along with substantial liquidity.
  • 6**Investment Portfolio Performance:** While subject to market volatility, investment and derivative activities contributed positively to net earnings, with significant gains realized from strategic equity exchanges.
  • 7**Commitment to Shareholder Value:** Berkshire Hathaway continued its focus on long-term value creation, emphasizing strong capital management and operational efficiency across its vast business empire.

Frequently Asked Questions

Berkshire Hathaway's primary sources of revenue and earnings in 2014 were diversified across its major business segments. The insurance group generated significant revenue from premiums earned and investment income. The railroad business (BNSF) and the utilities and energy segment (Berkshire Hathaway Energy) were also major contributors to revenue and earnings. Additionally, the manufacturing, service, and retailing businesses collectively provided substantial revenue and earnings growth.

Berkshire's insurance operations performed strongly in 2014. The underwriting segment reported a net underwriting gain of $1.69 billion, benefiting from a lack of significant catastrophe losses, which had impacted prior years. Investment income from insurance operations remained substantial, contributing $3.54 billion to net earnings.

In 2014, Berkshire Hathaway's capital allocation activities included significant investments in its operating businesses, particularly in capital expenditures for the railroad and utilities sectors. The company also completed several business acquisitions, notably NV Energy and AltaLink for its energy business, and made strategic acquisitions in its manufacturing segment. While no significant share repurchases were made under the approved program in 2014, the company maintained substantial cash and cash equivalents, reflecting its commitment to financial strength and flexibility.

BNSF's railroad operations generated revenues of $23.2 billion and net earnings of $3.9 billion in 2014, showing an increase despite service challenges attributed to severe weather. The utilities and energy segment, primarily through Berkshire Hathaway Energy, reported revenues of $17.6 billion and net earnings attributable to Berkshire Hathaway shareholders of $1.9 billion, driven by acquisitions (like NV Energy and AltaLink) and the performance of its regulated utility operations.