Berkshire Hathaway Inc. (BRK.B) is a diversified holding company whose subsidiaries engage in insurance, freight rail transportation, energy generation and distribution, manufacturing, and retailing. Berkshire also holds a large portfolio of equity securities and derivatives, which are reported separately from these main business activities.

The company's list of competitors reflects Berkshire's diverse family of businesses and includes: insurance companies All State Corp. (ALL), Progressive Corp. (PGR), and Jefferies Financial Group Inc. (JEF); freight rail companies Union Pacific Corp. (UNP) and CSX Corp. (CSX); and utility and electricity companies General Electric Co. (GE) and NextEra Energy Inc. (NEE). Berkshire also competes with various manufacturers and retailers.

Key Takeaways

  • Berkshire Hathaway owns businesses in insurance, rail transportation, energy generation and distribution, manufacturing, and retailing.
  • Insurance generates the most revenue and earnings. It was also the only segment that grew in Q2 2020.
  • Berkshire's manufacturing and services and retail businesses have been hit hard by the economic impact of the COVID-19 pandemic.
  • The company announced at the end of August that it had acquired 5% passive stakes in five leading Japanese trading companies.

Berkshire Hathaway’s Financials

Berkshire posted total revenue of $56.8 billion in Q2 2020, which ended June 30, 2020. Total revenue fell 10.6% compared to the same three-month period a year ago amid the adverse economic impacts of the COVID-19 pandemic. The company noted that revenue from its manufacturing as well as its service and retailing business has declined considerably as a result of the crisis.

Net earnings, however, grew 86.3% compared to the year-ago quarter, for total net earnings of $26.4 billion in Q2 2020. That growth is largely attributable to a significant increase in the value of Berkshire's large equity portfolio, which rose 299.5% compared to Q2 2019. As of changes made to GAAP in 2018, the company is required to include unrealized gains and losses arising from changes in its investment portfolio in its reported earnings. This accounting change contributes to earnings being significantly more volatile than they otherwise would be.

Berkshire Hathaway’s Business Segments

Berkshire provides a breakdown for 6 major segments for revenue and earnings before taxes (EBT), a measure of profitability before taxes. Total revenue and EBT for these segments in Q2 2020 was $56.8 billion and $6.5 billion, not including gains/losses from investments and derivatives.

Insurance

Berkshire's underwriting businesses include: GEICO, private passenger automobile insurance; Berkshire Hathaway Primary Group, property and casualty policies for commercial accounts; and Berkshire Hathaway Reinsurance Group, for excess-of-loss, quota-share, and facultative reinsurance. The segment also includes investment income.

Revenue grew 4.2% in Q2 2020 to $17.2 billion as EBT grew 26.7% to $2.7 billion. Revenue comprised more than 30% of the total and EBT almost 41% of total profit.

BNSF Railway

Berkshire's freight rail transportation business operates one of the largest systems in North America. BNSF Railway ships coal as well as consumer, industrial, and agricultural products.

BNSF Railway's revenue fell 21.9% in Q2 2020 to $4.6 billion as EBT fell 15.7% to $1.5 billion. Rail transport comprised only 8% of Berkshire's total revenue, but it generated nearly 23% of total EBT.

Berkshire Hathaway Energy

Berkshire Hathaway Energy is a global energy company with subsidiaries that generate, transmit, store, distribute, and supply energy. The segment's revenue fell 6.3% in Q2 2020 to $4.7 billion while EBT declined 10.1% to $533 million. Both revenue and EBT comprised about 8% of the respective totals for each metric.

Manufacturing

Berkshire's manufacturing businesses fall into three categories: industrial products, building products, and consumer products. Manufacturing revenue fell 19.6% in Q2 2020 to $13.0 billion as EBT declined 44.6% to $1.4 billion. Manufacturing accounted for 23% of total revenue and for about 21% of total EBT.

McLane Company

McLane is a wholesale distributor that serves businesses including convenience stores, discount retailers, wholesale clubs, and drug stores. It's separated into three units: grocery distribution, foodservice distribution, and beverage distribution. Revenue fell 9.6% in Q2 2020 to $11.2 billion as EBT declined 25.4% to $44 million. McLane comprises nearly 20% of total revenue, but only about 1% of EBT.

Service and Retailing

The service businesses includes grocery and foodservice distribution, professional aviation training, and fractional aircraft ownership. The retail businesses include automotive and home furnishings. Segment revenue fell 19.1% in Q2 2020 to $6.0 billion while EBT fell 45.2% to $408 million. The segment comprised 11% of total revenue and about 6% of total EBT.

Investment and Derivative Gains/Losses

Berkshire Hathaway also owns a large portfolio of equity securities and derivatives. Some of the company's top equity holdings include Apple Inc. (AAPL), Bank of America Corp. (BAC), and Coca-Cola Co. (KO). That portfolio posted a gain of $30.0 billion between Q2 2019 and Q2 2020, which explains why Berkshire Hathaway's net earnings were significantly higher than operating earnings from its regular businesses.

Berkshire Hathaway’s Recent Developments

Berkshire announced in late August that it had acquired a little over 5% of the outstanding shares of five leading Japanese general trading companies: Itochu Corp. (8001), which trades textiles, metals, commodities, energy products, and more; Marubeni Corp. (8002), which has business divisions in iron and steel, technology, energy, and more; Mitsubishi Corp. (8058), which engages in IT and electronics, fuels, metals, machinery, and more; Mitsui & Co. Ltd. (8031), which engages in iron and steel, machinery, chemicals, foods, energy, and more; and Sumitomo Corp. (8053), which imports and exports a wide variety of goods, including metals, machinery, food products, textiles, and more. Berkshire said that intends to hold these investments for the long term.

How Berkshire Hathaway Reports Diversity & Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Berkshire Hathaway and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Berkshire Hathaway releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Berkshire Hathaway discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Berkshire Hathaway breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Berkshire Hathaway Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
C-Suite
 
       
General Management          
Employees