01—Abstract
Summary
Summary of the 10-K filed February 27, 2017. Cited figures are marked; the original filing is the authoritative source.
Berkshire Hathaway Inc. (BRK-B) reported strong financial performance for the fiscal year ending December 31, 2016.
The company experienced growth across its diverse business segments, including insurance, railroads, utilities and energy, manufacturing, service, retailing, and finance. Total revenues increased, driven by higher insurance premiums earned and robust sales from its manufacturing, service, and retailing operations. Net earnings attributable to Berkshire Hathaway shareholders remained substantial, reflecting both operational performance and significant investment gains.
The company's insurance businesses, a core component of its operations, continued to demonstrate resilience, with underwriting gains and substantial investment income. GEICO, in particular, saw increased premiums written and earned. BNSF Railway navigated a challenging environment with lower volumes but maintained profitability.
Berkshire Hathaway Energy reported increased earnings, benefiting from rate increases and lower operational costs. The company's extensive manufacturing, service, and retailing segments, bolstered by strategic acquisitions like Precision Castparts (PCC) and Duracell, also contributed positively to overall results. The report highlights Berkshire's consistent financial strength, substantial liquidity, and commitment to shareholder value.
02—Key points
Key Highlights
- Total revenues for 2016 reached $223.6 billion, an increase from $210.9 billion in 2015, driven by growth across multiple business segments.
- Net earnings attributable to Berkshire Hathaway shareholders remained strong at $24.1 billion in 2016, consistent with the previous year.
- Insurance premiums earned increased to $45.9 billion, reflecting growth in both primary insurance and reinsurance operations.
- The acquisition of Precision Castparts Corp. (PCC) significantly boosted manufacturing segment revenues and earnings.
- Berkshire Hathaway Energy reported increased earnings, benefiting from regulatory approvals and operational efficiencies.
- The company maintained a strong liquidity position, with cash, cash equivalents, and U.S. Treasury Bills totaling $70.9 billion at year-end 2016.
- The company's stock repurchase program remained available, though no shares were repurchased in 2016, with a commitment to maintain at least $20 billion in cash and equivalents.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 27, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $215.11B$210.94B | +2.0% |
| Operating Expenses | $190.86B$175.88B | +8.5% |
| Interest Expense | $3.74B$3.52B | +6.4% |
| Net Income | $24.07B$24.08B | 0.0% |
05—Questions
Frequently Asked Questions
What were Berkshire Hathaway's key sources of revenue in 2016?
Berkshire Hathaway's primary sources of revenue in 2016 were sales and service revenues from its manufacturing, service, and retailing businesses ($119.5 billion), followed by insurance premiums earned ($45.9 billion) and railroad, utilities, and energy revenues ($37.5 billion). Investment income also contributed significantly.
How did the insurance segment perform in 2016?
The insurance segment was a major driver of Berkshire's results. Premiums earned increased to $45.9 billion. Underwriting contributed $1.4 billion in net underwriting gains, and investment income from insurance operations was $3.6 billion. The GEICO business saw significant premium growth, while General Re and Berkshire Hathaway Reinsurance Group also reported positive underwriting gains.
What was the impact of major acquisitions on Berkshire's 2016 financial results?
The acquisition of Precision Castparts Corp. (PCC) in January 2016 and Duracell in February 2016 significantly impacted the manufacturing segment. PCC alone added approximately $7.9 billion in revenues and $1.2 billion in pre-tax earnings for the year. These acquisitions contributed to the overall increase in total revenues and earnings, despite some integration costs for Duracell.
What is Berkshire Hathaway's financial position regarding liquidity and debt?
Berkshire Hathaway maintained a very strong financial position. As of December 31, 2016, the company held $70.9 billion in cash, cash equivalents, and U.S. Treasury Bills. Total shareholders' equity was $283 billion. The company's debt levels across its various segments (insurance, railroad, utilities, finance) totaled approximately $102.6 billion, which was well-managed relative to its overall asset base and earnings power.
06—Continue