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Berkshire Hathaway’s (NYSE:BRK.B) (NYSE:BRK.A) businesses represent a wide swath of American industry, spanning insurance, transportation, housing and real estate, consumer products, industrial manufacturing, and energy, to name a few.
And as many companies have already reported, supply chain disruptions and other factors have pushed up its cost of doing business. “Many of our businesses were negatively affected by ongoing global supply chain disruptions, including those attributable to major winter storms and a hurricane in North America, which contributed to higher input costs,” the company said in its 10-K for 2021.
2021 total costs and expenses rose 5.5% to $243.9B from $231.3B. By contrast, costs and expenses rose 2.5% in 2020.
Breaking down some of those costs and expenses, insurance losses and loss adjustment expenses accounted for $50.0B of the 2021 total and rose almost 14% Y/Y. Cost of sales and services at $114.1B increased 13%.
Utilities and energy cost of sales and other expenses (not included in the “cost of sales and services” number above) rose 20% to $14.0B; freight rail transportation expenses of $14.5B increased 10% Y/Y.
Notably, Berkshire’s (BRK.B) selling, general and administrative expenses fell to $18.8B in 2021, down 4.9% from $19.8B in 2020.
Some highlights for the company’s businesses in 2021:
- Its insurance underwriting business earned $728M, including $2.3B of after-tax losses from significant catastrophe events, in 2021 vs. $657M, and $750M of catastrophe losses, in 2020. Underwriting results in 2021 were helped by reductions in incurred losses for prior accident years under P&C contracts and hurt by lower earned premium from the GEICO giveback program, higher private passenger auto claim frequencies and severities estimates, and higher losses in the life reinsurance business.
- After-tax earnings from its insurance investment income in the year fell 4.6% from 2020 and were negatively affected by declines in interest rates on its substantial holdings of cash and U.S. Treasury bills.
- Its railroad business after-tax earnings increased 16% in 2021, reflecting overall higher freight volumes, higher average revenue per car/unit, and improved productivity, partly offset by higher average fuel prices and volume-related costs.
- After-tax earnings from its utilities and energy business rose 13% Y/Y helped by higher earnings from its utilities and natural gas pipelines businesses, which included the effects of a business acquisition and from its real estate brokerage business.
- Manufacturing, service, and retailing businesses’ earnings jumped 34% in 2020. “While customer demand for products was relatively high during the year, several of our businesses experienced higher materials, freight and other input costs attributable to ongoing disruptions in global supply chains,” the company said.
Earlier, Berkshire Hathaway buys back $6.9B of stock in Q4; operating earnings rise 45%
