10-QPeriod: Q2 FY2021

BERKSHIRE HATHAWAY INC Quarterly Report for Q2 Ended Jun 30, 2021

Filed August 9, 2021For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported strong financial results for the six months ending June 30, 2021, with net earnings attributable to shareholders reaching $39.8 billion, a significant turnaround from a net loss of $23.5 billion in the same period of 2020. This recovery was largely driven by a substantial increase in investment and derivative gains, which totaled $33.1 billion for the six months, compared to a loss of $30.2 billion in the prior year, primarily due to unrealized gains on equity securities. Total revenues also saw a healthy increase, reaching $133.7 billion for the period, up from $118.1 billion in the prior year, reflecting broad-based strength across its diverse operating segments. The company's balance sheet remains exceptionally strong, with shareholders' equity growing to $478.8 billion. Berkshire Hathaway also actively repurchased its own stock, spending $12.6 billion in the first six months of 2021, demonstrating continued confidence in its intrinsic value. The company maintains a robust liquidity position, with cash, cash equivalents, and U.S. Treasury Bills totaling $140.7 billion held by its insurance and other businesses.

Financial Highlights

28 data points
Beta

Revenue

$69.11B

Net Income

$28.43B

41.1% Net Margin

Total Assets

$912.49B

Cash & Equivalents

$42.83B

Free Cash Flow

$7.11B

Financial Statements
Beta
Revenue$69.11B
Operating Expenses$60.93B
Net Income$28.43B

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders were $39.8 billion for the first six months of 2021, a substantial improvement from a loss of $23.5 billion in the prior year, driven by significant investment gains.
  • 2Total revenues increased to $133.7 billion for the first six months of 2021 from $118.1 billion in the same period of 2020, indicating broad operational strength.
  • 3Shareholders' equity grew to $478.8 billion as of June 30, 2021, reflecting strong earnings and capital accumulation.
  • 4Investment and derivative gains/losses swung from a net loss of $30.2 billion in the first six months of 2020 to a net gain of $33.1 billion in the first six months of 2021, largely due to a recovery in equity security valuations.
  • 5The company repurchased $12.6 billion of its own stock in the first six months of 2021, signaling management's belief in the company's intrinsic value.
  • 6Insurance underwriting operations generated a pre-tax profit of $1.43 billion for the first six months of 2021, with GEICO showing strong performance despite increased claims frequency.
  • 7The railroad, utilities, and energy segments demonstrated solid performance, with BNSF and Berkshire Hathaway Energy reporting increased revenues and earnings.

Frequently Asked Questions

The primary driver of the significant improvement in net earnings was the substantial swing from investment and derivative losses in the first six months of 2020 to large investment and derivative gains in the same period of 2021. This was largely driven by the recovery and appreciation of equity securities held by Berkshire Hathaway.

The insurance segment, viewed as two activities (underwriting and investment), saw pre-tax underwriting earnings of $1.43 billion for the first six months of 2021, slightly down from $1.52 billion in the prior year. GEICO's pre-tax underwriting earnings were $1.65 billion, a decrease from $3.04 billion in 2020, mainly due to higher losses and loss adjustment expenses, as claims frequencies and severities increased, partly offset by the GEICO Giveback program's reduced premium impact.

Berkshire Hathaway actively repurchases its shares when management believes the repurchase price is below the company's intrinsic value. In the first six months of 2021, the company spent $12.6 billion on repurchasing Class A and Class B common stock, indicating confidence in its valuation. The program has no expiration date and continues as long as cash reserves remain above a certain threshold.

Berkshire Hathaway's diverse operations include Insurance, Railroad (BNSF), Utilities and Energy (Berkshire Hathaway Energy), Manufacturing, Service, and Retailing. All segments contributed to revenue growth in the first six months of 2021. Manufacturing, Service, and Retailing businesses showed particularly strong earnings growth, recovering significantly from pandemic impacts in 2020.