10-QPeriod: Q2 FY2015

BERKSHIRE HATHAWAY INC Quarterly Report for Q2 Ended Jun 30, 2015

Filed August 7, 2015For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc.'s second-quarter and first six months of 2015 filings reveal a strong financial performance, with net earnings attributable to shareholders of $4.01 billion and $9.18 billion, respectively. While this represents a decrease from the prior year's comparable periods, driven by a significant decline in investment and derivative gains, the underlying operational businesses demonstrated resilience and growth. The company's robust insurance segment continued to generate substantial investment income, and its railroad, utilities, and energy sectors showed improved profitability. Acquisitions, including the significant Van Tuyl Group and AltaLink, contributed positively to revenue and earnings, underscoring Berkshire's strategic growth initiatives. Despite market volatility and a notable increase in insurance underwriting losses, particularly at GEICO, Berkshire Hathaway maintained a strong balance sheet with substantial cash reserves and shareholder equity, positioning it well for future opportunities.

Financial Highlights

28 data points
Beta

Revenue

$51.55B

Net Income

$4.01B

7.8% Net Margin

Total Assets

$540.77B

Cash & Equivalents

$66.59B

Free Cash Flow

$4.59B

Financial Statements
Beta
Revenue$51.55B
Operating Expenses$45.52B
Net Income$4.01B
Shares Outstanding (Basic)1.64M

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders were $4.01 billion for Q2 2015 and $9.18 billion for the first six months of 2015.
  • 2Total revenues across all segments increased to $51.37 billion in Q2 2015 and $100.01 billion for the first six months of 2015.
  • 3The Insurance and Other segment generated $10.4 billion in premiums earned for Q2 2015, with investment income remaining strong.
  • 4Railroad, Utilities and Energy segment saw improved pre-tax earnings, driven by operational efficiencies at BNSF and the acquisition of AltaLink.
  • 5Significant business acquisitions, including Van Tuyl Group (now Berkshire Hathaway Automotive) and AltaLink, contributed to revenue and asset growth.
  • 6Consolidated shareholders' equity increased to $246.0 billion as of June 30, 2015.
  • 7The company maintained substantial liquidity with $66.6 billion in cash and cash equivalents as of June 30, 2015.

Frequently Asked Questions

The decrease in net earnings was primarily due to a significant reduction in investment and derivative gains. In 2014, Berkshire recorded substantial gains from the exchange of Phillips 66 and Graham Holdings Company common stocks, which did not recur in 2015. While operational earnings remained strong, the lower investment gains led to a lower reported net earnings figure.

The insurance segment's investment income remained robust. However, underwriting results saw a decline, with pre-tax underwriting losses of $38 million in Q2 2015 compared to a pre-tax gain of $411 million in Q2 2014. This was largely due to increased losses and loss adjustment expenses at GEICO, driven by higher claim frequencies and severities, and a significant underwriting loss at Berkshire Hathaway Reinsurance Group, influenced by a large catastrophe loss in Australia and foreign currency impacts.

Recent acquisitions, such as the Van Tuyl Group (Berkshire Hathaway Automotive) and AltaLink, have had a positive impact on revenue and asset growth. These acquisitions are contributing to the performance of the Manufacturing, Service and Retailing, and Utilities and Energy segments, respectively, demonstrating Berkshire's continued strategy of acquiring sound businesses.

Berkshire Hathaway has an ongoing share repurchase program that allows for repurchases of Class A and Class B shares at prices not exceeding a 20% premium over book value. However, repurchases will not occur if they would reduce consolidated cash and cash equivalents below $20 billion. No shares were repurchased during the first six months of 2015, indicating that current cash levels were prioritized for other investments or strategic opportunities.