10-KPeriod: FY2023

BERKSHIRE HATHAWAY INC Annual Report, Year Ended Dec 31, 2023

Filed February 26, 2024For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported strong net earnings of $96.2 billion for the fiscal year ended December 31, 2023, a significant turnaround from a net loss of $22.8 billion in the prior year. This turnaround was largely driven by a substantial increase in investment and derivative contract gains, which swung from a loss of $67.9 billion in 2022 to a gain of $74.9 billion in 2023. The company's diverse operations, including insurance, freight rail (BNSF), utilities and energy (BHE), manufacturing, service, and retailing businesses, collectively contributed to the robust financial performance. The insurance underwriting segment also showed a strong recovery, reporting pre-tax earnings of $6.9 billion in 2023, compared to a loss of $22 million in 2022, benefiting from lower catastrophe losses and improved results at GEICO. BNSF's earnings saw a decline, while BHE's earnings were significantly impacted by increased wildfire loss estimates. Despite these challenges, Berkshire Hathaway's overall financial position remains exceptionally strong, with significant cash reserves and a commitment to capital allocation through share repurchases.

Financial Highlights

30 data points
Beta

Revenue

$364.48B

Net Income

$97.15B

26.7% Net Margin

Total Assets

$1.07T

Cash & Equivalents

$38.64B

Free Cash Flow

$29.79B

Financial Statements
Beta
Revenue$364.48B
Operating Expenses$321.14B
Interest Expense$5.00B
Net Income$97.15B

Key Highlights

  • 1Berkshire Hathaway reported a net earning of $96.2 billion in 2023, a substantial improvement from a net loss of $22.8 billion in 2022.
  • 2Investment and derivative contract gains surged to $74.9 billion in 2023, reversing a $67.9 billion loss in 2022.
  • 3Insurance underwriting segment turned profitable with $6.9 billion in pre-tax earnings in 2023, a significant recovery from a $22 million loss in 2022, aided by reduced catastrophe losses and improved GEICO performance.
  • 4BNSF experienced a decline in pre-tax earnings to $6.6 billion in 2023, down from $7.7 billion in 2022, due to lower volumes and higher operating costs.
  • 5Berkshire Hathaway Energy (BHE) pre-tax earnings decreased to $940 million in 2023, primarily impacted by wildfire loss accruals, a significant drop from $3.1 billion in 2022.
  • 6Pilot Travel Centers (PTC), now fully consolidated, contributed $1.1 billion in pre-tax earnings in 2023, though revenues decreased due to lower fuel prices and volumes.
  • 7The company maintained a strong financial position with $561.3 billion in shareholders' equity and $163.3 billion in cash, cash equivalents, and U.S. Treasury Bills at year-end 2023.

Frequently Asked Questions

Berkshire Hathaway reported a significant increase in net earnings to $96.2 billion in 2023, a substantial turnaround from a net loss of $22.8 billion in 2022. This improvement was primarily driven by a significant increase in investment and derivative contract gains, which moved from a loss in 2022 to a substantial gain in 2023. The company's diverse business segments also contributed to the strong results, with the insurance underwriting segment showing a notable recovery.

The insurance segment performed strongly in 2023. The underwriting activities generated pre-tax earnings of $6.9 billion, a significant improvement from a nominal loss in the previous year. This was supported by reduced losses from catastrophe events and improved underwriting results at GEICO. Additionally, investment income from insurance operations increased significantly, driven by higher interest rates.

The significant increase in investment and derivative contract gains in 2023, from a loss in 2022 to a gain of $74.9 billion, was primarily attributable to market price changes in equity securities. The company holds a concentrated portfolio of equity investments, and favorable market movements during the year contributed significantly to this gain. It's important to note that Berkshire Hathaway emphasizes that these investment gains and losses, whether realized or unrealized, are generally not considered meaningful for understanding the operating performance of its businesses.

The company faces several risks, including cybersecurity threats, geopolitical events, and dependency on key personnel. Notably, Berkshire Hathaway Energy (BHE) recorded significant estimated pre-tax loss accruals of approximately $1.9 billion in 2023 related to wildfires in Oregon and California. Additionally, HomeServices of America, a subsidiary, is facing antitrust litigation with a jury verdict of $1.8 billion, which could be trebled under federal law, though the company is appealing this verdict. These are significant contingencies that are being actively managed and litigated.