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Berkshire (BRK.B) Q2 Earnings Down on Soft Segment Results

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Berkshire Hathaway Inc. (BRK.B - Free Report) delivered second-quarter 2020 operating earnings of $5.5 billion that decreased 10.6% year over year.

Soft performance in Railroad, Utilities and Energy as well as Manufacturing, Service and Retailing resulted in the decline. However, better results at Insurance and Other acted as a partial offset.

Behind the Headlines

Revenues decreased 10.6% year over year to $56.8 billion, attributable to lower revenues from Insurance and Other operations as well as Railroad, Utilities and Energy.

Costs and expenses increased 9.4% year over year to $61.3 billion, largely due to increase in costs and expenses in Insurance and Other.

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise

Berkshire Hathaway Inc. price-consensus-eps-surprise-chart | Berkshire Hathaway Inc. Quote

Segment Results

Berkshire Hathaway’s Insurance and Other segment revenues increased 4.2% year over year to $17.2 billion in the second quarter of 2020 on the back of higher insurance premiums earned. Pretax earnings were $2.7 billion, up 26.7% year over year.

Railroad, Utilities and Energy operating revenues declined 14.7 year over year to $9.3 billion due to decrease in volume, average revenue per car/unit and soft energy business. Pretax earnings of $2.1 billion were down 14% year over year. Second-quarter earnings reflected lower shipping volumes, including the negative effects of COVID-19, partly offset by productivity improvements, which lowered operating costs, and soft Utilities as well as Energy business.

Total revenues at Manufacturing, Service and Retailing decreased 16% year over year to $30.3 billion. Pretax earnings declined 44.4% year over year to $1.9 billion. Impacts of COVID-19 weighed on the results.

Financial Position

As of Jun 30, 2020, consolidated shareholders’ equity was $393.5 billion, down 7.4% from the level as of Dec 31, 2019. At quarter end, cash and cash equivalents were $36.1 billion, down 43.8% from the level at 2019 end.

The company exited the first quarter of 2020 with a float of about $131 billion, up $2 billion from the figure at year-end 2019.

Cash flow from operating activities totaled $17.5 billion in the first half of 2020, up 4.2% from the year-ago period.

The company bought back shares worth $5.1 billion, taking the first half tally to $6.7 billion

Zacks Rank

Berkshire Hathaway currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Insurance Releases

Of the insurance industry players that have reported second-quarter results so far, The Progressive Corporation (PGR - Free Report) , Cincinnati Financial (CINF - Free Report) , and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate for earnings.

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