Summary
Berkshire Hathaway Inc. (BRK-B) reported strong financial results for the second quarter and first six months of 2018, driven by significant gains in investment and derivative income, alongside solid performance across its diverse operating businesses. Net earnings attributable to Berkshire Hathaway shareholders saw a substantial increase, aided by the lower U.S. corporate tax rate following the Tax Cuts and Jobs Act of 2017. The company's insurance operations demonstrated robust underwriting gains, particularly GEICO and Berkshire Hathaway Primary Group, while investment income also contributed positively. The railroad segment (BNSF) and utilities/energy (Berkshire Hathaway Energy) showed revenue growth and improved profitability. Manufacturing, service, and retailing businesses, along with finance and financial products, also delivered increased earnings. A key change in accounting treatment starting in 2018 requires unrealized gains and losses on equity securities to be recognized in earnings, contributing to increased earnings volatility but not impacting overall shareholder equity. The company maintained a strong financial position with substantial cash and investment holdings. Berkshire Hathaway's liquidity remains exceptionally strong, with consolidated shareholders' equity increasing to $358.1 billion at June 30, 2018. The company held approximately $103.2 billion in cash, cash equivalents, and U.S. Treasury Bills across its insurance and other businesses. Significant investment holdings, totaling $192.6 billion in securities (excluding Kraft Heinz), underscore the company's asset base. The amendment to the common stock repurchase program now allows repurchases based on management's assessment of intrinsic value, providing continued flexibility for capital deployment. The company's outlook remains positive, supported by its diversified business model and robust financial strength.
Financial Highlights
28 data points| Revenue | $62.20B |
| Operating Expenses | $53.79B |
| Net Income | $12.01B |
Key Highlights
- 1Net earnings attributable to Berkshire Hathaway shareholders surged to $12.011 billion in Q2 2018 and $10.873 billion in the first six months, significantly up from $4.262 billion and $8.322 billion, respectively, in the prior year periods.
- 2The adoption of ASU 2016-01 starting in 2018 led to the recognition of unrealized gains/losses on equity securities directly in earnings, contributing to significant reported investment gains/losses ($5.118 billion net gain in Q2 2018) and increased earnings volatility.
- 3Insurance underwriting results improved substantially, with pre-tax underwriting gains of $1.204 billion in Q2 2018 (vs. $24 million loss in Q2 2017) and $1.722 billion in the first six months (vs. $403 million loss in the prior year), driven by strong performance at GEICO and the reinsurance groups.
- 4The effective income tax rate decreased significantly due to the Tax Cuts and Jobs Act of 2017, impacting all business segments and contributing to higher net earnings.
- 5BNSF railroad revenues increased by 12.0% in Q2 and 10.2% in the first six months, driven by higher volumes and average revenue per car/unit.
- 6Berkshire Hathaway Energy reported increased revenues and earnings, benefiting from operational improvements and favorable tax rates.
- 7Consolidated shareholders' equity grew to $358.1 billion as of June 30, 2018, supported by strong net earnings.
- 8The company maintained substantial liquidity with approximately $103.2 billion in cash, cash equivalents, and U.S. Treasury Bills as of June 30, 2018.