10-QPeriod: Q1 FY2022

BERKSHIRE HATHAWAY INC Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 2, 2022For Securities:BRK-BBRK-A

Summary

Berkshire Hathaway Inc. (BRK-B) reported its first-quarter 2022 financial results, showing a significant decrease in net earnings attributable to shareholders, falling to $5.46 billion from $11.71 billion in the prior year's first quarter. This decline was primarily driven by a substantial negative swing in investment and derivative contract gains (losses), which went from a gain of $5.70 billion in Q1 2021 to a loss of $1.98 billion in Q1 2022, largely due to unrealized losses on equity securities. Despite the drop in net earnings, the company's operational performance remained robust. Revenues increased to $70.81 billion from $64.60 billion year-over-year. Insurance underwriting, while experiencing a challenging quarter with GEICO reporting an underwriting loss, saw a modest overall net underwriting profit of $47 million. The railroad, utilities, energy, manufacturing, service, and retailing segments all demonstrated strong revenue and earnings growth, highlighting the resilience of Berkshire's diverse business portfolio amidst ongoing supply chain disruptions and inflationary pressures.

Financial Highlights

28 data points
Beta

Revenue

$70.84B

Net Income

$5.58B

7.9% Net Margin

Total Assets

$969.51B

Cash & Equivalents

$39.66B

Free Cash Flow

$3.74B

Financial Statements
Beta
Revenue$70.84B
Operating Expenses$62.25B
Net Income$5.58B

Key Highlights

  • 1Net earnings attributable to Berkshire Hathaway shareholders decreased significantly to $5.46 billion in Q1 2022 from $11.71 billion in Q1 2021, primarily due to negative investment and derivative contract gains/losses.
  • 2Total revenues increased to $70.81 billion in Q1 2022 from $64.60 billion in Q1 2021, driven by growth across most operating segments.
  • 3Insurance underwriting reported a net underwriting earnings of $47 million, a sharp decline from $764 million in the prior year, heavily impacted by an underwriting loss at GEICO due to increased claims severity and frequency.
  • 4GEICO's underwriting results worsened considerably, showing a pre-tax loss of $178 million compared to a pre-tax profit of $1.02 billion, driven by rising claims costs.
  • 5Railroad, Utilities & Energy, and Manufacturing, Service & Retailing segments showed strong operational performance with increased revenues and pre-tax earnings.
  • 6Berkshire repurchased $3.2 billion of its own stock in the first quarter of 2022.
  • 7The company announced an agreement to acquire Alleghany Corporation for approximately $11.6 billion, expected to close in the fourth quarter of 2022.

Frequently Asked Questions

The significant decrease in net earnings was primarily due to investment and derivative contract gains (losses). In Q1 2022, the company recorded a pre-tax loss of $1.98 billion from these activities, largely driven by unrealized losses on equity securities, compared to a pre-tax gain of $5.70 billion in Q1 2021. While operational segments showed strength, the volatility in investment valuations heavily impacted the overall net earnings.

Berkshire's insurance segment experienced mixed results. Overall net underwriting earnings were $47 million, a significant drop from $764 million in the prior year. GEICO, in particular, reported a pre-tax underwriting loss of $178 million for the quarter, a substantial deterioration from a profit of $1.02 billion in Q1 2021. This was attributed to increased claims severity and frequency, with rising costs in auto insurance markets being a major factor.

Most other operating segments demonstrated resilience and growth. The railroad business (BNSF) saw increased earnings driven by higher revenue per car/unit. The Utilities and Energy segment (BHE) also reported higher earnings. The Manufacturing, Service, and Retailing segments collectively showed a substantial increase in after-tax earnings, indicating strong demand and effective cost management despite ongoing supply chain challenges and inflation.

Berkshire Hathaway announced an agreement to acquire Alleghany Corporation for approximately $11.6 billion, which is expected to close in the fourth quarter of 2022. Alleghany operates in the property and casualty reinsurance and insurance businesses, as well as owning a diverse portfolio of non-financial businesses. This acquisition signals Berkshire's continued strategy of acquiring well-managed businesses and expanding its insurance and diverse operating portfolio.