10-KPeriod: FY2019

BERKSHIRE HATHAWAY INC Annual Report, Year Ended Dec 31, 2019

Filed February 24, 2020For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) demonstrated strong financial performance in 2019, driven by significant gains in its investment portfolio, particularly in equity securities. Total revenues reached $254.6 billion, with net earnings attributable to shareholders soaring to $81.4 billion. This substantial increase in net earnings was largely due to a significant after-tax unrealized gain of $57.4 billion on investments, reflecting the company's strategic allocation towards a concentrated portfolio of public equities. The insurance businesses, a core pillar of Berkshire's operations, generated positive underwriting results and substantial investment income. Berkshire's diverse business segments, including railroads (BNSF), utilities (Berkshire Hathaway Energy), manufacturing, service, and retailing, all contributed to the overall financial strength. While BNSF saw a slight revenue dip, its pre-tax earnings increased due to operating efficiencies and cost control. The utilities segment also reported higher earnings, benefiting from favorable regulatory mechanisms and improved operational performance. The company's capital allocation strategy, including share repurchases, remained a key focus, with $5.0 billion in shares repurchased in 2019. Berkshire maintained a robust liquidity position, with significant cash and cash equivalents, underscoring its financial resilience.

Financial Highlights

31 data points
Beta

Revenue

$254.62B

Net Income

$81.42B

32.0% Net Margin

Total Assets

$817.73B

Cash & Equivalents

$64.63B

Free Cash Flow

$22.71B

Financial Statements
Beta
Revenue$254.62B
Operating Expenses$225.70B
Interest Expense$3.96B
Net Income$81.42B

Key Highlights

  • 1Total revenues increased to $254.6 billion in 2019.
  • 2Net earnings attributable to Berkshire Hathaway shareholders surged to $81.4 billion in 2019, primarily driven by $57.4 billion in after-tax investment and derivative gains.
  • 3The insurance underwriting segment reported a net underwriting gain of $325 million, a decrease from $1.6 billion in 2018 but an improvement from a loss in 2017.
  • 4Investment income from insurance operations grew by 21.4% in 2019 to $5.5 billion.
  • 5BNSF, the railroad business, reported a 5.0% increase in after-tax earnings to $5.5 billion, benefiting from higher rates and cost controls despite lower freight volumes.
  • 6Berkshire Hathaway Energy's after-tax earnings increased by 8.4% to $2.8 billion.
  • 7The company repurchased $5.0 billion of its Class A and Class B common stock in 2019, aligning with its flexible capital allocation strategy.

Frequently Asked Questions

The primary driver of Berkshire Hathaway's net earnings in 2019 was a significant after-tax gain of $57.4 billion from investments and derivatives. This gain was largely attributable to the appreciation of its equity security holdings, which are concentrated in a few large issuers.

Berkshire's insurance businesses showed mixed underwriting results, with a net underwriting gain of $325 million in 2019, down from $1.6 billion in 2018 due to increased catastrophe losses and prior-year reserve adjustments. However, investment income from insurance operations continued to grow, increasing by 21.4% to $5.5 billion.

BNSF saw a slight decrease in revenues but reported a 5.0% increase in after-tax earnings due to operational efficiencies and cost control initiatives. Berkshire Hathaway Energy also experienced growth, with after-tax earnings increasing by 8.4%, driven by improved earnings across its various utility and energy operations.

Berkshire Hathaway's Board of Directors authorized an amendment to its repurchase program in 2018, allowing repurchases at any time the Chairman and Vice Chairman believe the price is below intrinsic value. The company repurchased $5.0 billion of its stock in 2019 and will not repurchase shares if its cash, cash equivalents, and U.S. Treasury Bill holdings fall below $20 billion, emphasizing financial strength and liquidity.