BERKSHIRE HATHAWAY INC. (10-Q)
Berkshire Hathaway Inc. reported its quarterly financial results for the period ended March 31, 2025. The company’s consolidated balance sheet showed total assets of $733.4 billion, total liabilities of $444.4 billion, and shareholders’ equity of $289 billion. The company’s consolidated statements of earnings reported net earnings of $12.4 billion, or $3,444 per Class A equivalent share, compared to net earnings of $11.4 billion, or $3,144 per Class A equivalent share, in the same period last year. The company’s cash and cash equivalents increased by $1.4 billion to $123.4 billion, and its investments in common stocks increased by $1.1 billion to $143.4 billion. The company’s management’s discussion and analysis of financial condition and results of operations highlighted the company’s strong financial position, its ability to generate cash, and its investment in various businesses and investments.
Berkshire Hathaway’s Diverse Businesses Navigating Challenging Times
Berkshire Hathaway, the conglomerate led by legendary investor Warren Buffett, has released its latest financial report for the first quarter of 2025. The report provides a detailed look at the performance of Berkshire’s wide-ranging business operations, which span insurance, railroads, energy, manufacturing, service, and retailing.
Insurance Underwriting Impacted by Catastrophe Losses
Berkshire’s insurance businesses, which include GEICO, Berkshire Hathaway Primary Group, and Berkshire Hathaway Reinsurance Group, saw a mixed performance in the first quarter. GEICO’s underwriting earnings increased, driven by higher premiums and improved loss ratios. However, the Berkshire Hathaway Primary Group and Reinsurance Group experienced significant underwriting losses, primarily due to claims from the Southern California wildfires.
Table 1: Insurance Underwriting Results (in millions)
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Pre-tax Underwriting Earnings (Loss) | ||
| GEICO | $2,173 | $1,928 |
| Berkshire Hathaway Primary Group | $(144) | $486 |
| Berkshire Hathaway Reinsurance Group | $(307) | $912 |
| Pre-tax Underwriting Earnings | $1,722 | $3,326 |
| Net Underwriting Earnings | $1,336 | $2,598 |
The report highlights the inherent volatility in Berkshire’s insurance underwriting results, which can be significantly impacted by the timing and magnitude of major catastrophe events. The company’s insurance operations continue to focus on generating long-term underwriting profits, except in certain specialized businesses like retroactive reinsurance and periodic payment annuities.
Railroad and Energy Businesses Deliver Solid Results
Berkshire’s railroad subsidiary, BNSF, reported a 6.2% increase in after-tax earnings in the first quarter, driven by higher volumes and improved operating efficiencies, despite the negative impact of severe weather. Berkshire Hathaway Energy (BHE), the company’s energy business, saw a 53% increase in after-tax earnings, reflecting higher earnings from its utility and energy operations, as well as reduced losses from its real estate brokerage activities.
Table 2: BNSF and BHE Earnings (in millions)
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| BNSF Net Earnings | $1,214 | $1,143 |
| BHE Net Earnings Attributable to Berkshire | $1,097 | $717 |
The strong performance of Berkshire’s railroad and energy businesses helped offset the challenges faced by the insurance operations, demonstrating the benefits of the company’s diversified business model.
Manufacturing, Service, and Retailing Segments See Mixed Results
Berkshire’s manufacturing, service, and retailing businesses reported a slight decrease in overall pre-tax earnings in the first quarter. The manufacturing segment saw a 6.8% decline in pre-tax earnings, with mixed results across its industrial, building, and consumer products businesses. The service and retailing segments had a more varied performance, with the service businesses reporting a 9.6% increase in pre-tax earnings, while the retailing businesses experienced a 7.6% decline.
Table 3: Manufacturing, Service, and Retailing Earnings (in millions)
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Manufacturing Pre-tax Earnings | $2,716 | $2,914 |
| Service and Retailing Pre-tax Earnings | $1,290 | $1,143 |
| Net Earnings | $3,060 | $3,088 |
The report notes that the majority of Berkshire’s businesses experienced lower revenues and earnings in the first quarter of 2025 compared to the prior year, reflecting the impact of the challenging macroeconomic environment on consumer demand and business operations.
Investment Gains and Losses Contribute to Volatility
Berkshire’s reported net earnings were significantly impacted by investment gains and losses, which can be highly volatile due to changes in the market prices of the company’s equity securities portfolio. In the first quarter of 2025, Berkshire recorded net investment losses of $5.0 billion, compared to net investment gains of $1.5 billion in the same period of 2024.
Table 4: Investment Gains (Losses) (in millions)
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Investment Gains (Losses) | $(6,435) | $1,876 |
| Net Earnings | $(5,038) | $1,480 |
Berkshire’s management continues to emphasize that these investment gains and losses are generally meaningless in understanding the company’s reported periodic results or evaluating the economic performance of its operating businesses. The volatility in investment gains and losses can significantly impact Berkshire’s reported net earnings from one period to the next.
Solid Financial Condition and Liquidity
Berkshire’s consolidated balance sheet remains strong, with shareholders’ equity of $654.5 billion as of March 31, 2025. The company’s insurance and other businesses held $328.0 billion in cash, cash equivalents, and U.S. Treasury Bills, providing ample liquidity. Berkshire’s total consolidated borrowings were $125.9 billion, with the majority of the debt issued by Berkshire, its financing subsidiary BHFC, and its subsidiaries BNSF and BHE.
The report notes that Berkshire’s common stock repurchase program, which allows the company to buy back its shares at prices below their intrinsic value, remains in place. However, Berkshire is committed to maintaining a minimum of $30 billion in cash, cash equivalents, and U.S. Treasury Bills, and will not repurchase shares if it would reduce this liquidity threshold.
Outlook and Risks
Berkshire’s management acknowledges the considerable uncertainty surrounding the ultimate impact of ongoing macroeconomic and geopolitical events, as well as changes in industry or company-specific factors, on the company’s businesses. The report highlights the potential for adverse consequences on most, if not all, of Berkshire’s operating businesses, as well as on its investments in equity securities, which could significantly affect the company’s future results.
The report also discusses critical accounting estimates, such as the estimation of unpaid losses and loss adjustment expenses in the insurance business, as well as the assessment of potential impairment of goodwill and indefinite-lived intangible assets. These estimates and judgments involve significant uncertainty and could have a material impact on Berkshire’s financial statements if actual results differ from the company’s forecasts.
In conclusion, Berkshire Hathaway’s diverse business operations continue to navigate a challenging environment, with the insurance underwriting segment facing significant headwinds from catastrophe losses, while the railroad, energy, and other businesses demonstrate resilience. The company’s strong financial position and liquidity provide a solid foundation to weather the current uncertainties and pursue future opportunities.
