Berkshire Hathaway Inc

Analysis

Business Description

Berkshire Hathaway Inc (Berkshire) is a holding group that engages in a number of diverse business activities through its subsidiaries. Berkshire focuses on insurance and reinsurance operations, and operating railroad systems in North America. It also focuses on manufacturing, service and retailing, finance and financial products activities.

The company operates through six business segments: Insurance, Manufacturing, McLane Company, Service and Retailing, Burlington Northern Santa Fe Corporation (BNSF) and Berkshire Hathaway Energy.

Business Segments
Overview

Focuses on generating, transmitting, storing, distributing and supplying energy through Berkshire Hathaway Energy Company (BHE). BHE's domestic regulated utility interests comprises four regulated utility companies, which serves about 5.2 million retail customers; ownership interests in electricity transmission businesses; and two interstate natural gas pipeline companies with about 21,300 miles of pipeline and a design capacity of about 21 billion cubic feet of natural gas every day.

In Great Britain, BHE’s distribution subsidiaries serve approximately 3.9 million electricity end-users and its electricity transmission business in Alberta, Canada serves about 85% of Alberta’s population. BHE’s interests also comprises the second-largest residential real estate brokerage company in the US, a diversified independent power projects portfolio, and a residential real estate brokerage franchise networks in the US.

Performance

Reported revenue of US$21,031 million for FY2020, which grew 4.6% YoY, and reported a CAGR of 4.2% during 2016-20. Accounted for 8.6% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$2,479 million in FY2019, which decreased 5.3% YoY.

Growth in revenue was due to increase in Real estate operating revenue and energy operating revenues by 20.6% and 1.2%, respectively, in FY2020.

Inventore veritatis
Overview

Operates railroad systems with about 32,500 route miles of track in 28 states and three Canadian provinces through Burlington Northern Santa Fe, LLC. Serves the Pacific Northwest, Western, Midwest, Southeastern and Southwestern ports and regions of the US. Transports an array of commodities and products of agricultural, manufacturing and natural resource industries.

Performance

Reported revenue of US$20,869 million for FY2020, which decreased 11.3% YoY, and reported a CAGR of 1.3% during 2016-20. Accounted for 8.5% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$6,792 million in FY2019, which decreased 6.3% YoY.

Overview

Offers property and casualty insurance and reinsurance, and life, health and accident reinsurance products.

Underwrites its business through GEICO, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group.

GEICO provides private passenger automobile insurance to individuals in the US. Offers insurance coverage for all-terrain vehicles, boats, motorcycles, recreational vehicles and small commercial fleets.

Berkshire Hathaway Reinsurance Group offers reinsurance for property and casualty, life and health in 23 countries through National Indemnity Company and General Reinsurance Corporation.

Berkshire Hathaway Primary Group provides commercial insurance products such as motor vehicle insurance, general liability insurance, workers’ compensation insurance, commercial property insurance and commercial auto insurance in the US. Also offers insurance products for healthcare professional liability, surety, executive and professional lines, and travel.

Key Stats

In FY2020, GEICO, Berkshire Hathaway Reinsurance Group and Berkshire Hathaway Primary Group reported premium written of US$34,928 million, US$19,761 million and US$10,212 million, respectively.

Performance

Reported revenue of US$69,361 million for FY2020, which grew 2.5% YoY, and reported a CAGR of 8.3% during 2016-20. Accounted for 28.2% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$6,787 million in FY2019, which decreased 3.3% YoY.

Growth in revenue was due to 3.8% increase in insurance underwriting income.

Overview

Manufactures industrial products such as components for aerospace and power generation applications, metal cutting tools and specialty chemicals; and consumer products comprising alkaline batteries, jewellery, apparel products, recreational vehicles, and custom picture framing products. Also, manufactures building products, including roofing and engineered products, bricks and masonry products, insulation, flooring products, building and engineered components, and paint and coatings for building and construction applications.

Performance

Reported revenue of US$59,079 million for FY2020, which decreased 5.8% YoY, and reported a CAGR of 6.2% during 2016-20. Accounted for 24.1% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$8,010 million in FY2019, which decreased 15.9% YoY.

Decline in revenue was due to 16.1% decrease in revenue from industrial products, resulting from decrease in revenue from Precision Castparts Corp, Lubrizol, Marmon, and International Metalworking Companies.

Overview

Offers wholesale distribution services of groceries and non-food items to convenience stores, wholesale clubs, military bases, drug stores, quick service restaurants, discount retailers, and casual dining restaurants in the US through McLane Company, Inc. Also, operates wholesale distributors of distilled spirits, beer and wine though its subsidiaries and 14 distribution centers in Georgia, Tennessee, North Carolina and Colorado.

Key Stats

As of December 31, 2020,

Grocery distribution unit served 50,000 retail locations nationwide through 25 distribution facilities in 20 states.

Foodservice distribution unit served about 33,200 restaurants nationwide through 46 facilities in 22 states.

Beverage distribution unit served about 25,600 retail locations in the Southeastern US and Colorado. Distributed distilled spirits, beer and wine through 14 distribution centers in Georgia, Tennessee, North Carolina and Colorado.

Performance

Reported revenue of US$46,840 million for FY2020, which decreased 7.2% YoY, and reported a negative CAGR of 0.6% during 2016-20. Accounted for 19.1% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$251 million in FY2019, which decreased 12.8% YoY.

Overview

Focuses on distribution of electronic components, aviation pilot training, media and logistics businesses, professional aviation training programs, franchising and servicing of quick service restaurants and fractional aircraft ownership programs.

Performance

Reported revenue of US$28,178 million for FY2020, which decreased 4.4% YoY, and reported a CAGR of 2.6% during 2016-20. Accounted for 11.5% of the company's revenue, excluding corporate, eliminations and other, in FY2020. Reported EBIT of US$2,628.0 million in FY2019, which grew 2.9% YoY.

Geographical Segments
Performance

Reported insurance premiums written of US$1,898 million for FY2020, which grew 19.4% YoY, and reported a CAGR of 3.6% during 2017-20. Accounted for 2.9% of the company's insurance premiums written in FY2020.

Inventore veritatis
Performance

Reported insurance premiums written of US$5,062 million for FY2020, which grew 7.8% YoY, and reported a CAGR of 27.8% during 2017-20. Accounted for 7.8% of the company's insurance premiums written in FY2020.

Performance

Reported insurance premiums written of US$53,070 million for FY2020, which decreased 0% YoY, and reported a negative CAGR of 0.5% during 2017-20. Accounted for 81.8% of the company's insurance premiums written in FY2020.

Performance

Reported insurance premiums written of US$4,871 million for FY2020, which grew 41.5% YoY, and reported a CAGR of 5.2% during 2017-20. Accounted for 7.5% of the company's insurance premiums written in FY2020.