10-KPeriod: FY2016

BERKSHIRE HATHAWAY INC Annual Report, Year Ended Dec 31, 2016

Filed February 27, 2017For Securities:BRK-BBRK-A

Summary

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.

Financial Highlights

30 data points
Beta

Revenue

$215.11B

Net Income

$24.07B

11.2% Net Margin

Total Assets

$620.85B

Cash & Equivalents

$28.05B

Free Cash Flow

$19.58B

Financial Statements
Beta
Revenue$215.11B
Operating Expenses$190.86B
Interest Expense$3.74B
Net Income$24.07B

Key Highlights

  • 1Total revenues for 2016 reached $223.6 billion, an increase from $210.9 billion in 2015, driven by growth across multiple business segments.
  • 2Net earnings attributable to Berkshire Hathaway shareholders remained strong at $24.1 billion in 2016, consistent with the previous year.
  • 3Insurance premiums earned increased to $45.9 billion, reflecting growth in both primary insurance and reinsurance operations.
  • 4The acquisition of Precision Castparts Corp. (PCC) significantly boosted manufacturing segment revenues and earnings.
  • 5Berkshire Hathaway Energy reported increased earnings, benefiting from regulatory approvals and operational efficiencies.
  • 6The company maintained a strong liquidity position, with cash, cash equivalents, and U.S. Treasury Bills totaling $70.9 billion at year-end 2016.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.