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

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Berkshire Hathaway Inc. (BRK.B - Free Report) delivered second-quarter operating earnings of $6.1 billion, which decreased 10.9% year over year.

This decline was mainly due to weak insurance business results.

Behind the Headlines

Revenues increased 2.2% year over year to $60.7 billion.

Costs and expenses increased 4.1% year over year to $56 billion.

Pre-tax income came in at $17.8 billion, up 17.6% year over year.

Berkshire Hathaway Inc. Price, Consensus and EPS Surprise

Segment Results

Berkshire Hathaway’s huge and growing Insurance Operations segment has kept its underwriting profit streak alive for more than 15 years. Revenues from the Insurance group increased 6.2% year over year to $16.5 billion. This segment’s net earnings attributable to Berkshire Hathaway were $1.719 billion, down 17.6% year over year.

Railroad, Utilities and Energy operating revenues decreased 1.1% year over year to $10.9 billion owing to higher contribution from Burlington Northern SantaFe Corp. (BNSF). Net earnings of $1.9 billion were up 2.9% year over year on 2.2% increase from railroad business as well as a 4.5% increase from the utilities and energy business.

Total revenues at Manufacturing, Service and Retailing rose 1.2% year over year to $36.1 billion. Net earnings grew marginally year over year to $2.5 billion.

Financial Position

As of Jun 30, 2019, consolidated shareholders’ equity was $386.4 billion, up 9.6% from the level as of Dec 31, 2018. At quarter-end, cash and cash equivalents were $44.6 billion, up 47% from the level at 2018 end.

Berkshire’s debt was $99.907 billion as on Jun 30, 2019, a 2.5% increase since Dec 31, 2018.

The company exited the second quarter with a float of about $125 billion, up $2 billion from year-end 2018.

Cash flow from operating activities totaled $16.8 billion, up 4.2% year over year.

Zacks Rank

Berkshire Hathaway currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other P&C Insurers

Second-quarter earnings of The Progressive Corporation (PGR - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate while that of The Travelers Companies (TRV - Free Report) missed expectations.

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