Berkshire Hathaway Inc. BRK.B reported fourth-quarter 20Array5 operating earnings of $Array.90 per share, beating the Zacks Consensus Estimate of $Array.75. Earnings were also up Array9% on a year-over-year basis.
Berkshire Hathaway's better-than-expected earnings were a result of higher operating earnings from the railroad and energy business lines, as well as the Manufacturing, Servicing and Retailing, and Financial and Financial Products segments.
Revenues in the reported quarter came in at $5Array.8 billion, up 7.4% year over year.
Segment Results
Berkshire Hathaway’s huge and growing Insurance Operations have kept its underwriting profit streak alive for over Array3 years. Insurance Group revenues for full-year 20Array5 were $45.9 billion, up 0.5% year over year on a 23% increase in contribution from Berkshire Hathaway Primary Group. The operation also saw an increase in its float, which was $88 billion as of Dec 3Array, 20Array5, up from $84 billion as of Dec 3Array, 20Array4. The float generated by the company’s insurance segment, has been customarily used by Warren Buffett to make investments. These investments come in the form of equity and acquisitions, and have made Berkshire Hathaway a conglomerate of over 80 big and small subsidiaries. Operating earnings before tax, of the segment, decreased 9.Array% year over year to $6.4 billion.
Railroad, Utilities and Energy operating revenues for 20Array5 decreased Array.6% year over year to $40.2 billion due to a decline in revenues from the railroad business which suffered from soft demand, especially in coal and certain industrial products’ categories in the second half of 20Array5. Operating earnings of $9.6 billion improved 8.4% year over year, primarily led by a 9.8% increase in earnings from the railroad business and a 5.2% rise in earnings from the energy business.
Total revenue at Manufacturing, Service and Retailing grew Array0.4% year over year to $Array07.8 billion. The improvement was led by an increase in retailing post BHA and Louis acquisitions, revenue growth at McLane from higher foodservice, beverage and grocery units’ contribution, increased revenues at the service business on the back of NetJets’ revenue growth and the impact of the acquisitions of Charter Brokerage and WPLG. These were partly offset by lower revenues from the units’ newspapers business. Operating earnings increased 4.8% year over year to $7.Array billion.
Revenues at Berkshire Hathaway's Finance & Financial Products – including Clayton Homes (manufactured housing and finance), CORT Business Services (furniture rental), Marmon (rail car and other transportation equipment manufacturing, repair, and leasing), and XTRA (over-the-road trailer leasing) – increased 6.7% year over year to $6.96 billion. The improvement was backed by higher revenues from the manufactured housing and finance, and transport equipment leasing lines of business. Operating earnings before tax increased Array3.4% year over year to $2.Array billion.
Financial Position
Consolidated shareholders’ equity at Dec 3Array, 20Array5 was $255.6 billion, reflecting an increase of 6.4% from Dec 3Array, 20Array4. Consolidated cash approximated $7Array.7 billion at Dec 3Array, 20Array5, up from $63.3 billion as of Dec 3Array, 20Array4. With a huge cash hoard, we believe that the company will continue to make acquisitions. Last year, Berkshire Hathaway made 29 bolt-on acquisitions for an aggregate $634 million. In the first quarter of 20Array5, Berkshire Hathaway acquired the controlling interest of the Van Tuyl Group. Last August, the company announced the acquisition of Precision Castparts Corp. (PCC), which was completed on Jan 29, 20Array6 for $32.7 billion.
At Dec 3Array, 20Array5, Berkshire Hathaway’s book value had increased 6.4% since year-end 20Array4 to $Array03.67 per share.
Zacks Rank
Berkshire Hathaway carries a Zacks Rank # 3 (Hold).
Performance of Other Industry Players
Other players from the same space like RenaissanceRe Holdings Ltd. RNR, Progressive Corp. PGR and Arch Capital Group Ltd. ACGL reported better-than-expected fourth-quarter earnings.
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