filings.toolsItem 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
87K characters. Original on sec.gov · Markdown
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
After-tax other earnings include corporate investment income not allocated to operating businesses, earnings from equity method investments and foreign currency exchange rate gains and losses related to non-U.S. Dollar denominated debt. Other earnings declined $721 million in the second quarter and $1.76 billion in the first six months of 2025, reflecting foreign currency exchange rate losses in the second quarter and first six months of 2025 versus gains in 2024, partially offset by increased corporate investment income. After-tax foreign currency exchange rate losses were $877 million in the second quarter and $1.6 billion in the first six months of 2025 compared to gains of $446 million and $1.0 billion in the corresponding 2024 periods. After-tax corporate investment income increased $1.1 billion in the first six months of 2025 compared to 2024, primarily attributable to the impact of increased investments derived from subsidiary capital distributions to Berkshire.
Insurance—Underwriting
Our periodic underwriting earnings may be subject to considerable volatility from the timing and magnitude of significant property catastrophe loss events. Further, we generally do not retrocede the risks we assume. We currently consider consolidated pre-tax losses exceeding $150 million from an event occurring in the current year to be significant. We incurred significant losses in 2025 from the Southern California wildfires in the first quarter, while we experienced no significant catastrophe events in the first six months of 2024. Changes in estimates for unpaid losses and loss adjustment expenses, including amounts established for occurrences in prior years, and foreign currency transaction gains and losses arising from the remeasurement of non-U.S. Dollar denominated assets and liabilities can also significantly affect our periodic underwriting results.
We write primary insurance and reinsurance policies covering property and casualty risks, as well as life and health risks. Our insurance and reinsurance businesses are GEICO, Berkshire Hathaway Primary Group (“BH Primary”) and Berkshire Hathaway Reinsurance Group (“BHRG”). We strive to generate pre-tax underwriting earnings (defined as premiums earned less insurance losses/benefits incurred and underwriting expenses) over the long term in all business categories, except in our retroactive reinsurance and periodic payment annuity businesses. Time-value-of-money concepts are important considerations in establishing premiums for these policies, which are recognized as charges to earnings over the claim settlement periods.
Underwriting results of our insurance businesses are summarized below (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||
| Pre-tax underwriting earnings: | |||||||||||||
| GEICO | $ | 1,821 | $ | 1,786 | $ | 3,994 | $ | 3,714 | |||||
| Berkshire Hathaway Primary Group | 63 | 279 | (81 | ) | 765 | ||||||||
| Berkshire Hathaway Reinsurance Group | 650 | 782 | 343 | 1,694 | |||||||||
| Pre-tax underwriting earnings | 2,534 | 2,847 | 4,256 | 6,173 | |||||||||
| Income taxes | 542 | 584 | 928 | 1,312 | |||||||||
| Net underwriting earnings | $ | 1,992 | $ | 2,263 | $ | 3,328 | $ | 4,861 | |||||
| Effective income tax rate | 21.4 | % | 20.5 | % | 21.8 | % | 21.3 | % |
GEICO
GEICO writes property and casualty insurance policies, primarily private passenger automobile insurance, in all 50 states and the District of Columbia. GEICO offers its policies mainly by direct response methods where most customers apply for insurance coverage directly to the company. GEICO also operates an insurance agency that offers primarily homeowners and renters insurance to its auto policyholders. A summary of GEICO’s underwriting results follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| Premiums written | $ | 11,003 | $ | 10,458 | $ | 22,509 | $ | 21,254 | |||||||||||||||||
| Premiums earned | $ | 11,064 | 100.0 | $ | 10,469 | 100.0 | $ | 21,816 | 100.0 | $ | 20,703 | 100.0 | |||||||||||||
| Losses and loss adjustment expenses | 7,945 | 71.8 | 7,755 | 74.1 | 15,369 | 70.4 | 15,169 | 73.3 | |||||||||||||||||
| Underwriting expenses | 1,298 | 11.7 | 928 | 8.8 | 2,453 | 11.3 | 1,820 | 8.8 | |||||||||||||||||
| Total losses and expenses | 9,243 | 83.5 | 8,683 | 82.9 | 17,822 | 81.7 | 16,989 | 82.1 | |||||||||||||||||
| Pre-tax underwriting earnings | $ | 1,821 | $ | 1,786 | $ | 3,994 | $ | 3,714 |
Premiums written increased $545 million (5.2%) in the second quarter and $1.3 billion (5.9%) in the first six months of 2025 compared to 2024, reflecting an increase in policies-in-force and higher average premiums per policy. Premiums earned increased $595 million (5.7%) in the second quarter and $1.1 billion (5.4%) in the first six months of 2025 compared to 2024.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Insurance—Underwriting
GEICO
Losses and loss adjustment expenses increased $190 million (2.5%) in the second quarter and $200 million (1.3%) in the first six months of 2025 compared to 2024. GEICO’s loss ratio (losses and loss adjustment expenses to premiums earned) was 71.8% in the second quarter and 70.4% in the first six months of 2025, decreases of 2.3 percentage points and 2.9 percentage points, respectively, compared to 2024. The loss ratio declines reflected the impact of higher average earned premiums per auto policy and lower claims frequencies, partially offset by increases in average claims severities and less favorable development of prior accident years’ claims estimates.
Private passenger automobile claims frequencies declined in the first six months of 2025 versus 2024 for property damage and collision coverages (six to nine percent range), with bodily injury coverage frequency down slightly. Average claims severities in the first six months of 2025 increased for both collision (one to three percent range) and bodily injury (eight to ten percent range) coverages compared to 2024. Losses and loss adjustment expenses included reductions in the ultimate loss estimates for prior accident years’ claims of $135 million in the first six months of 2025 compared to $205 million in 2024.
Underwriting expenses increased $370 million (39.9%) in the second quarter and $633 million (34.8%) in the first six months of 2025 compared to 2024. GEICO’s expense ratio (underwriting expense to premiums earned) was 11.3% in the first six months of 2025, an increase of 2.5 percentage points compared to 2024. The increases were attributable to increased policy acquisition related expenses. The earnings from GEICO’s insurance agency (third-party commissions, net of operating expenses) are included as a reduction of underwriting expenses.
Berkshire Hathaway Primary Group
BH Primary consists of several independently managed underwriting operations that provide a variety of primarily commercial insurance solutions, including healthcare professional liability, workers’ compensation, automobile, general liability, property and specialty coverages for small, medium and large clients. BH Primary’s insurers include Berkshire Hathaway Specialty Insurance (“BHSI”), RSUI Group and CapSpecialty (“RSUI and CapSpecialty”), Berkshire Hathaway Homestate Companies (“BHHC”), MedPro Group, GUARD Group (“GUARD”), National Indemnity Company (“NICO Primary”), Berkshire Hathaway Direct (“BH Direct”) and U.S. Liability Insurance Companies (“USLI”).
A summary of BH Primary’s underwriting results follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| Premiums written | $ | 4,820 | $ | 4,931 | $ | 9,243 | $ | 9,424 | |||||||||||||||||
| Premiums earned | $ | 4,677 | 100.0 | $ | 4,656 | 100.0 | $ | 9,254 | 100.0 | $ | 9,197 | 100.0 | |||||||||||||
| Losses and loss adjustment expenses | 3,193 | 68.3 | 3,093 | 66.4 | 6,645 | 71.8 | 5,905 | 64.2 | |||||||||||||||||
| Underwriting expenses | 1,421 | 30.4 | 1,284 | 27.6 | 2,690 | 29.1 | 2,527 | 27.5 | |||||||||||||||||
| Total losses and expenses | 4,614 | 98.7 | 4,377 | 94.0 | 9,335 | 100.9 | 8,432 | 91.7 | |||||||||||||||||
| Pre-tax underwriting earnings (loss) | $ | 63 | $ | 279 | $ | (81 | ) | $ | 765 |
Premiums written declined 2.3% in the second quarter and 1.9% in the first six months of 2025 compared to 2024. The declines were primarily due to reductions at GUARD (36% year-to-date) and, to a lesser degree, at BHSI and RSUI, partially offset by higher volumes at NICO Primary, BHHC and BH Direct. GUARD’s premium declines reflected volume reductions across multiple product categories due to management’s decision to exit certain unprofitable lines and tightened overall underwriting standards beginning in 2024. The increases at NICO Primary and BHHC were primarily attributable to commercial auto and property business, while the increases at BH Direct reflected growth across several lines of business and product categories.
Losses and loss adjustment expenses increased $100 million (3.2%) in the second quarter and $740 million (12.5%) in the first six months of 2025 compared to 2024. The loss ratio increased 1.9 percentage points in the second quarter and 7.6 percentage points in the first six months of 2025 compared to 2024. Losses incurred from the Southern California wildfires were approximately $300 million in the first six months of 2025. Losses incurred in 2025 also included increases in estimated ultimate losses for prior accident years’ claims of $401 million in the first six months, attributable to higher ultimate loss estimates in liability coverages, partly offset by lower ultimate loss estimates in property coverages. In the first six months of 2024, incurred loss estimates for prior accident years’ claims were reduced by $228 million. Casualty claim costs continue to be negatively impacted by unfavorable social inflation trends, including the impacts of jury awards and litigation costs.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Insurance—Underwriting
Berkshire Hathaway Primary Group
Underwriting expenses increased $137 million (10.7%) in the second quarter and $163 million (6.5%) in the first six months of 2025 compared to 2024. The expense ratio increased 2.8 percentage points in the second quarter and 1.6 percentage points in the first six months of 2025 compared to 2024. The increases were primarily due to increases at GUARD and business mix changes.
Berkshire Hathaway Reinsurance Group
The Berkshire Hathaway Reinsurance Group offers excess-of-loss and quota-share reinsurance coverages on property and casualty risks to insurers and reinsurers worldwide through the NICO, General Re and TransRe Groups. We also write life and health reinsurance coverages through the General Re Group and Berkshire Hathaway Life Insurance Company of Nebraska. A summary of BHRG’s pre-tax underwriting results follows (in millions).
| Second Quarter | First Six Months | ||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||
| Property/casualty | $ | 1,045 | $ | 1,022 | $ | 1,113 | $ | 2,030 | |||||
| Life/health | 52 | 73 | 122 | 181 | |||||||||
| Retroactive reinsurance | (268 | ) | (161 | ) | (477 | ) | (308 | ) | |||||
| Periodic payment annuity | (213 | ) | (163 | ) | (412 | ) | (314 | ) | |||||
| Variable annuity | 34 | 11 | (3 | ) | 105 | ||||||||
| Pre-tax underwriting earnings | $ | 650 | $ | 782 | $ | 343 | $ | 1,694 |
Property/casualty
A summary of property/casualty reinsurance underwriting results follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| Premiums written | $ | 5,022 | $ | 5,547 | $ | 11,157 | $ | 12,002 | |||||||||||||||||
| Premiums earned | $ | 5,108 | 100.0 | $ | 5,608 | 100.0 | $ | 10,343 | 100.0 | $ | 11,043 | 100.0 | |||||||||||||
| Losses and loss adjustment expenses | 2,754 | 53.9 | 3,124 | 55.7 | 6,353 | 61.4 | 6,117 | 55.4 | |||||||||||||||||
| Underwriting expenses | 1,309 | 25.6 | 1,462 | 26.1 | 2,877 | 27.8 | 2,896 | 26.2 | |||||||||||||||||
| Total losses and expenses | 4,063 | 79.5 | 4,586 | 81.8 | 9,230 | 89.2 | 9,013 | 81.6 | |||||||||||||||||
| Pre-tax underwriting earnings | $ | 1,045 | $ | 1,022 | $ | 1,113 | $ | 2,030 |
Premiums written declined $525 million (9.5%) in the second quarter and $845 million (7.0%) in the first six months of 2025 compared to 2024, primarily attributable to less property business being written. Premiums earned decreased 8.9% in the second quarter and 6.3% in the first six months of 2025 compared to 2024.
Losses and loss adjustment expenses declined $370 million (11.8%) in the second quarter and increased $236 million (3.9%) in the first six months of 2025 compared to 2024. The loss ratio decreased 1.8 percentage points in the second quarter and increased 6.0 percentage points in the first six months of 2025 compared to 2024. Losses incurred from the Southern California wildfires were approximately $760 million in the first six months of 2025. In the first six months, estimated ultimate liabilities for losses occurring in prior accident years were reduced $506 million in 2025 and $734 million in 2024, mostly attributable to lower-than-expected property losses.
Underwriting expenses decreased $153 million (10.5%) in the second quarter and $19 million (0.7%) in the first six months of 2025 compared to 2024. The expense ratio decreased 0.5 percentage points in the second quarter and increased 1.6 percentage points in the first six months of 2025 compared to 2024. Underwriting expenses included foreign currency exchange losses from the remeasurement of certain non-U.S. Dollar denominated liabilities of $58 million in the second quarter and $200 million in the first six months of 2025 and gains of $25 million in the second quarter and $51 million in the first six months of 2024. Otherwise, underwriting expenses in 2025 declined 15.9% in the second quarter and 9.2% in the first six months from 2024, primarily attributable to lower premiums earned and business mix changes.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Insurance—Underwriting
Berkshire Hathaway Reinsurance Group
Life/health
A summary of our life/health reinsurance underwriting results follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||
| Amount | % | Amount | % | Amount | % | Amount | % | ||||||||||||||||||
| Premiums written | $ | 1,347 | $ | 1,226 | $ | 2,590 | $ | 2,457 | |||||||||||||||||
| Premiums earned | $ | 1,346 | 100.0 | $ | 1,220 | 100.0 | $ | 2,586 | 100.0 | $ | 2,449 | 100.0 | |||||||||||||
| Life and health benefits | 1,043 | 77.5 | 842 | 69.0 | 1,999 | 77.3 | 1,675 | 68.4 | |||||||||||||||||
| Underwriting expenses | 251 | 18.6 | 305 | 25.0 | 465 | 18.0 | 593 | 24.2 | |||||||||||||||||
| Total benefits and expenses | 1,294 | 96.1 | 1,147 | 94.0 | 2,464 | 95.3 | 2,268 | 92.6 | |||||||||||||||||
| Pre-tax underwriting earnings | $ | 52 | $ | 73 | $ | 122 | $ | 181 |
Premiums earned increased $126 million (10.3%) in the second quarter and $137 million (5.6%) in the first six months of 2025, primarily due to increases in non-U.S. markets. Pre-tax underwriting earnings in 2025 declined $21 million in the second quarter and $59 million in the first six months compared to 2024. The year-to-date decline reflected the impact of U.S. life contract commutation gains of approximately $50 million in 2024.
Retroactive reinsurance
We have not written any significant retroactive reinsurance contracts in recent years. Pre-tax underwriting results derive from changes in the ultimate claim liability estimates and changes in the related deferred charge assets, as well as from foreign currency exchange gains and losses attributable to non-U.S. Dollar denominated reinsurance contracts. Changes in foreign currency exchange rates produced losses of $88 million in the second quarter and $128 million in the first six months of 2025 compared to losses of $26 million in the second quarter and gains of $19 million in the first six months of 2024. Pre-tax underwriting losses before foreign currency exchange gains/losses were $349 million in the first six months of 2025 compared to $327 million in 2024.
Unpaid losses and loss adjustment expenses for retroactive reinsurance contracts declined $710 million in the first six months of 2025 to $31.7 billion at June 30, 2025, primarily due to loss payments, partially offset by foreign currency effects. Deferred charge assets on retroactive reinsurance contracts declined $323 million in the first six months of 2025 to $8.5 billion at June 30, 2025. Deferred charge balances will be charged to earnings over the expected remaining claims settlement periods.
Periodic payment annuity
Premium rates for new periodic payment annuity business continue to be at unacceptable levels. We have not written any new business since 2022.
Pre-tax underwriting losses from periodic payment annuity contracts in each period included the accretion of discounted liabilities, including liabilities for contracts without life contingencies, as well as foreign currency exchange gains and losses on non-U.S. Dollar denominated contracts. Changes in foreign currency exchange rates produced losses of $87 million in the second quarter and $136 million in the first six months of 2025 compared to losses of $13 million in the second quarter and $15 million in the first six months of 2024. Pre-tax underwriting losses before foreign currency effects were $276 million in the first six months of 2025 compared to $299 million in 2024. Periodic payment annuity liabilities were $14.4 billion at June 30, 2025, which included liabilities of $4.0 billion for contracts without life contingencies, as well as the effects of discount rate changes recorded in accumulated other comprehensive income.
Variable annuity
Our variable annuity guarantee reinsurance contracts produced pre-tax losses of $3 million in the first six months of 2025 compared to earnings of $105 million in 2024. Earnings are affected by changes in securities markets, interest rates and foreign currency exchange rates. These contracts have been in run-off for many years.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Insurance—Investment Income
A summary of net investment income attributable to our insurance operations follows (dollars in millions).
| Second Quarter | First Six Months | Percentage Change | |||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Second Quarter | First Six Months | ||||||||||||||||
| Interest and other investment income | $ | 2,524 | $ | 2,599 | $ | 5,043 | $ | 4,530 | (2.9 | )% | 11.3 | % | |||||||||
| Dividend income | 1,479 | 1,469 | 2,521 | 2,690 | 0.7 | (6.3 | ) | ||||||||||||||
| Pre-tax net investment income | 4,003 | 4,068 | 7,564 | 7,220 | (1.6 | ) | 4.8 | ||||||||||||||
| Income taxes | 636 | 748 | 1,304 | 1,302 | |||||||||||||||||
| Net investment income | $ | 3,367 | $ | 3,320 | $ | 6,260 | $ | 5,918 | |||||||||||||
| Effective income tax rate | 15.9 | % | 18.4 | % | 17.2 | % | 18.0 | % |
Interest and other investment income decreased $75 million (2.9%) in the second quarter and increased $513 million (11.3%) in the first six months of 2025 compared to 2024. The decrease in the second quarter was primarily attributable to the impact of dividends paid by insurance subsidiaries to Berkshire in the fourth quarter of 2024 and lower interest rates. The subsequent income earned on the cash and investments distributed to Berkshire are included in other earnings shown on pages 31 and 45. The increase in the first six months reflected higher average investment balances. We continue to believe that maintaining ample liquidity is paramount and we insist on safety over yield with respect to short-term investments.
Dividend income was relatively unchanged in the second quarter and declined $169 million (6.3%) in the first six months of 2025 compared to 2024. The year-to-date decline was primarily due to the impact of net dispositions of equity securities, partially offset by higher dividend rates on certain of our holdings. Dividend income also varies from period to period due to changes in the investment portfolio and the frequency and timing of dividends from certain investees.
Invested assets of our insurance businesses derive from shareholder capital and net liabilities assumed under insurance contracts or “float.” The major components of float are unpaid losses and loss adjustment expenses, including liabilities under retroactive reinsurance contracts, life, annuity and health benefit liabilities, unearned premiums and certain other liabilities, which are reduced by insurance premiums receivable, reinsurance receivables, deferred charges assumed under retroactive reinsurance contracts and deferred policy acquisition costs. The effect of discount rate changes on long-duration insurance contracts, recorded in accumulated other comprehensive income, are excluded from float, as such amounts are not included in earnings in the Consolidated Statements of Earnings.
Float was approximately $174 billion at June 30, 2025 and $171 billion at December 31, 2024. The cost of float is measured as the ratio of pre-tax underwriting earnings to float balances. Our combined insurance operations generated pre-tax underwriting gains in the first six months of 2025 and 2024. Therefore, the average cost of float was negative in each period.
A summary of cash and investments held in our insurance businesses follows (in millions).
| June 30, 2025 | December 31, 2024 | |||||
| Cash, cash equivalents and U.S. Treasury Bills | $ | 221,999 | $ | 212,591 | ||
| Equity securities | 260,748 | 263,366 | ||||
| Fixed maturity securities | 14,848 | 15,137 | ||||
| Other, including loans to affiliates | 5,145 | 5,980 | ||||
| $ | 502,740 | $ | 497,074 |
Fixed maturity investments as of June 30, 2025 follows (in millions).
| Amortized Cost | Unrealized Gains (Losses) | Carrying Value | |||||||
| U.S. Treasury, U.S. government corporations and agencies | $ | 3,671 | $ | 12 | $ | 3,683 | |||
| Foreign governments | 9,660 | 62 | 9,722 | ||||||
| Corporate and other | 1,214 | 229 | 1,443 | ||||||
| $ | 14,545 | $ | 303 | $ | 14,848 |
U.S. government obligations are rated AA+ or Aa1 by the major rating agencies. Approximately 93% of our foreign government investments were rated AA or higher by at least one of the major rating agencies. Foreign government securities are issued or unconditionally guaranteed by national or provincial government entities.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
BNSF
Burlington Northern Santa Fe, LLC (“BNSF”) operates one of the largest railroad systems in North America, with over 32,500 route miles of track in 28 states. BNSF also operates in three Canadian provinces. BNSF classifies its major business groups by type of product shipped, including consumer products, agricultural and energy products, industrial products and coal. A summary of BNSF’s earnings follows (dollars in millions).
| Second Quarter | First Six Months | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Railroad operating revenues | $ | 5,726 | $ | 5,717 | $ | 11,402 | $ | 11,361 | ||||||||
| Railroad operating expenses | 3,713 | 3,897 | 7,568 | 7,818 | ||||||||||||
| Railroad operating earnings | 2,013 | 1,820 | 3,834 | 3,543 | ||||||||||||
| Other revenues (expenses), net | 66 | 69 | 120 | 130 | ||||||||||||
| Interest expense | (270 | ) | (267 | ) | (542 | ) | (532 | ) | ||||||||
| Pre-tax earnings | 1,809 | 1,622 | 3,412 | 3,141 | ||||||||||||
| Income taxes | 343 | 395 | 732 | 771 | ||||||||||||
| Net earnings | $ | 1,466 | $ | 1,227 | $ | 2,680 | $ | 2,370 | ||||||||
| Effective income tax rate | 19.0 | % | 24.4 | % | 21.5 | % | 24.5 | % |
A summary of BNSF’s railroad freight volumes by business group follows (cars/units in thousands).
| Cars/Units | Percentage Change | ||||||||||||||||||||||
| Second Quarter | First Six Months | Second | First Six | ||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Quarter | Months | ||||||||||||||||||
| Consumer products | 1,338 | 1,330 | 2,720 | 2,602 | 0.6 | % | 4.5 | % | |||||||||||||||
| Industrial products | 350 | 363 | 682 | 716 | (3.6 | ) | (4.7 | ) | |||||||||||||||
| Agricultural and energy products | 348 | 346 | 693 | 692 | 0.6 | 0.1 | |||||||||||||||||
| Coal | 291 | 256 | 589 | 549 | 13.7 | 7.3 | |||||||||||||||||
| 2,327 | 2,295 | 4,684 | 4,559 | 1.4 | 2.7 |
Railroad operating revenues increased slightly in both the second quarter and the first six months of 2025 compared to 2024. Car/unit volumes increased 1.4% and 2.7% in the second quarter and the first six months of 2025, respectively, compared to the same periods in 2024. Average revenue per car/unit declined 1.4% in the second quarter and 2.6% in the first six months of 2025 versus 2024, resulting from lower fuel surcharge revenue and unfavorable business mix, partially offset by core pricing gains. Pre-tax earnings increased 11.5% in the second quarter and 8.6% in the first six months of 2025 compared to 2024, attributable to lower operating expenses.
Operating revenues from consumer products were $2.0 billion in the second quarter and $4.0 billion in the first six months of 2025, decreases of 7.1% and 2.1%, respectively, from 2024. The revenue decreases were attributable to lower average revenue per car/unit, partially offset by slightly higher volumes in the second quarter and 4.5% higher volumes in the first six months of 2025 compared to 2024. The volume increases were primarily due to higher intermodal shipments from higher West Coast imports and an increase in automotive vehicle volume.
Operating revenues from industrial products were $1.3 billion in the second quarter and $2.5 billion in the first six months of 2025, decreases of 0.8% and 2.0%, respectively, from 2024. The revenue declines were attributable to reductions in volumes of 3.6% in the second quarter and 4.7% in the first six months of 2025 compared to 2024, partially offset by higher average revenue per car/unit. The volume declines were primarily due to lower construction and petroleum products shipments.
Operating revenues from agricultural and energy products were $1.6 billion in the second quarter and $3.2 billion in the first six months of 2025, increases of 3.5% and 2.2%, respectively, compared to 2024. The revenue increases were attributable to higher average revenue per car/unit and slightly higher volumes in both periods. The volume increases were primarily due to slightly higher grain exports, partially offset by lower domestic grain, feed and renewable fuel volumes.
Operating revenues from coal were $716 million in the second quarter and $1.5 billion in the first six months of 2025, increases of 17.8% and 5.6%, respectively, from 2024. The second quarter revenue increase was attributable to higher volumes of 13.7% and higher average revenue per car/unit. The revenue increase in the first six months of 2025 was primarily due to higher volumes of 7.3%, partially offset by lower average revenue per car/unit. The volume increases were primarily attributable to the competitive effects of higher natural gas prices.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
BNSF
Railroad operating expenses declined $184 million (4.7%) in the second quarter and $250 million (3.2%) in the first six months of 2025 compared to 2024. Compensation and benefits expenses increased $51 million (3.9%) in the second quarter and $26 million (1.0%) in the first six months of 2025 compared to 2024. The increases were primarily due to wage inflation, partially offset by improved employee productivity. Fuel expenses declined $124 million (15.1%) in the second quarter and $208 million (12.4%) in the first six months of 2025 compared to 2024, reflecting lower average fuel prices, partially offset by higher volumes. Other railroad operating expenses declined $111 million (6.3%) in the second quarter and $68 million (2.0%) in the first six months of 2025 compared to 2024. The declines were primarily due to litigation accruals in the second quarter of 2024 and ongoing cost management efforts.
Income tax expense declined $52 million (13.2%) in the second quarter and $39 million (5.1%) in the first six months of 2025 compared to 2024, primarily due to lower deferred state income tax expenses arising from reductions in enacted rates during the second quarter of 2025.
BHE
Berkshire Hathaway Energy Company (“BHE”) is a holding company with subsidiaries that primarily operate within the energy industry. BHE’s domestic regulated utility interests include PacifiCorp, MidAmerican Energy Company (“MEC”) and NV Energy. BHE’s natural gas pipelines consist of five domestic regulated interstate natural gas pipeline systems and a 75% interest in a liquefied natural gas export, import and storage facility (“Cove Point”). Other energy subsidiaries operate two regulated electricity distribution businesses in Great Britain (“Northern Powergrid”), a regulated electricity transmission-only business in Alberta, Canada, and a diversified portfolio of mostly renewable independent power projects and investments. Another BHE subsidiary, HomeServices of America, Inc. (“HomeServices”), operates a residential real estate brokerage business and a large network of real estate brokerage franchises in the United States.
The rates BHE’s regulated utility and energy businesses charge customers for energy and services are largely based on the costs of business operations, including income taxes and a return on capital, and are subject to regulatory approval. To the extent such costs are not allowed in the approved rates, operating results will be adversely affected. A summary of BHE’s net earnings follows (dollars in millions).
| Second Quarter | First Six Months | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenues: | ||||||||||||||||
| Energy operating revenue | $ | 5,130 | $ | 5,115 | $ | 10,636 | $ | 10,360 | ||||||||
| Real estate operating revenue | 1,264 | 1,289 | 2,124 | 2,155 | ||||||||||||
| Other income | 24 | 88 | 14 | 254 | ||||||||||||
| Total revenue | 6,418 | 6,492 | 12,774 | 12,769 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Energy cost of sales | 1,434 | 1,527 | 2,965 | 3,197 | ||||||||||||
| Energy operating expenses | 2,725 | 2,774 | 5,310 | 5,218 | ||||||||||||
| Real estate operating costs and expenses | 1,210 | 1,240 | 2,081 | 2,326 | ||||||||||||
| Interest expense | 664 | 625 | 1,310 | 1,270 | ||||||||||||
| Total costs and expenses | 6,033 | 6,166 | 11,666 | 12,011 | ||||||||||||
| Pre-tax earnings | 385 | 326 | 1,108 | 758 | ||||||||||||
| Income tax benefit | (357 | ) | (434 | ) | (779 | ) | (827 | ) | ||||||||
| Net earnings after income taxes | 742 | 760 | 1,887 | 1,585 | ||||||||||||
| Noncontrolling interests of BHE subsidiaries | 40 | 39 | 85 | 75 | ||||||||||||
| Net earnings attributable to BHE | 702 | 721 | 1,802 | 1,510 | ||||||||||||
| Noncontrolling interests and preferred stock dividends | — | 66 | 3 | 138 | ||||||||||||
| Net earnings attributable to Berkshire shareholders | $ | 702 | $ | 655 | $ | 1,799 | $ | 1,372 | ||||||||
| Effective income tax rate | (92.7 | )% | (133.1 | )% | (70.3 | )% | (109.1 | )% |
BHE’s income tax benefit and net earnings include significant production tax credits primarily from wind-powered electricity generation. On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted, introducing substantial revisions to federal energy-related tax policy. Among its provisions, the OBBBA accelerates the phase-out of clean electricity production and investment tax credits and establishes new sourcing requirements applicable to facilities commencing construction after December 31, 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
BHE
We are currently evaluating the potential implications of the OBBBA on BHE’s financial results and capital expenditures related to renewable energy, storage and technology neutral projects, including the potential impact on the economics and viability of such projects. These evaluations may be further affected by broader macroeconomic and geopolitical conditions, including changes in international trade policies and tariff regimes. Due to the inherent uncertainties involved, we are unable to estimate the impact on BHE’s energy business at this time.
The discussion of BHE’s operating results that follows is based on after-tax earnings, reflecting how the energy businesses are managed and evaluated. A summary of net earnings attributable to BHE follows (dollars in millions).
| Second Quarter | First Six Months | Percentage Change | |||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Second Quarter | First Six Months | ||||||||||||||||||
| U.S. utilities | $ | 434 | $ | 267 | $ | 862 | $ | 643 | 62.5 | % | 34.1 | % | |||||||||||
| Natural gas pipelines | 183 | 234 | 671 | 733 | (21.8 | ) | (8.5 | ) | |||||||||||||||
| Other energy businesses | 303 | 379 | 650 | 661 | (20.1 | ) | (1.7 | ) | |||||||||||||||
| Real estate brokerage | 45 | 43 | 30 | (116 | ) | 4.7 | *** | ||||||||||||||||
| Corporate interest and other | (263 | ) | (202 | ) | (411 | ) | (411 | ) | 30.2 | — | |||||||||||||
| $ | 702 | $ | 721 | $ | 1,802 | $ | 1,510 | (2.6 | ) | 19.3 |
——————
** Not meaningful.*
The U.S. utilities operate independently in several states, including Utah, Oregon, Wyoming and other Western states (PacifiCorp), Iowa and Illinois (MEC) and Nevada (NV Energy). Net earnings increased $167 million (62.5%) in the second quarter and $219 million (34.1%) in the first six months of 2025 compared to 2024. Pre-tax Wildfire loss accruals, net of expected insurance recoveries, at PacifiCorp were $251 million in the second quarter of 2024. See Note 22 to the accompanying Consolidated Financial Statements for additional information on the Wildfires. Otherwise, net earnings of the U.S. utilities in the second quarter and the first six months of 2025 reflected comparative increases in electric utility margin, partially offset by an increase in energy operating expenses and lower other income.
The U.S. utilities’ electric utility margin was $2.1 billion in the second quarter and $4.0 billion in the first six months of 2025, increases of $205 million (10.8%) and $430 million (11.9%), respectively, compared to 2024. The increases reflected higher retail customer rates in certain territories, higher retail customer volumes and higher wholesale prices and volumes, partially offset by higher energy costs. Retail customer volumes increased 3.3% overall (up 9.0% at MEC, 2.0% at PacifiCorp and 0.3% at NV Energy) in the first six months of 2025 compared to 2024, primarily due to higher customer usage, an increase in the average number of customers and an overall favorable impact of weather. The increase in energy operating expenses was primarily due to higher depreciation and amortization expense, insurance expenses and general and plant maintenance costs.
Net earnings of natural gas pipelines declined $51 million in the second quarter and $62 million in the first six months of 2025 compared to 2024. The decreases in earnings reflected higher interest expense, largely due to debt issued in January 2025 and debt refinancings in the fourth quarter of 2024 at higher interest rates, decreased margin on gas sales and lower other income, partially offset by higher transportation and storage revenues.
Net earnings of other energy businesses decreased $76 million in the second quarter and $11 million in the first six months of 2025 compared to 2024. The decreases were primarily due to lower earnings at Northern Powergrid, from lower distribution revenue in the second quarter of 2025 due to lower tariffs from inflation adjustments and deferred income tax charges related to the March 2025 enactment of a change in the Energy Profits Levy income tax in the United Kingdom, partially offset by favorable income tax expense from higher utilization of tax losses from upstream gas exploration and production activities.
Net earnings of real estate brokerage increased by $2 million in the second quarter and $146 million in the first six months of 2025 compared to 2024, primarily attributable to charges in 2024 with respect to the ongoing real estate industry litigation matters. In April 2024, HomeServices agreed to terms with the plaintiffs to settle all claims asserted against HomeServices and certain of its subsidiaries and effectuated a nationwide class settlement. See Note 22 to the accompanying Consolidated Financial Statements. The real estate brokerage business continues to be negatively impacted by the limited availability of homes for sale and high home prices.
Corporate interest and other after-tax earnings include BHE corporate interest expense and unallocated corporate and income tax expenses. Additionally, noncontrolling interests and preferred stock dividends include earnings attributable to non-Berkshire owners of BHE common stock and dividends on preferred stock held by other Berkshire subsidiaries. All remaining noncontrolling interests in BHE common stock were acquired in the second half of 2024 and the preferred stock was redeemed in the first quarter of 2025.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Manufacturing, Service and Retailing
A summary of revenues and earnings of our manufacturing, service and retailing businesses follows (dollars in millions).
| Second Quarter | First Six Months | Percentage Change | |||||||||||||||||
| Second | First Six | ||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | Quarter | Months | ||||||||||||||
| Revenues | |||||||||||||||||||
| Manufacturing | $ | 19,969 | $ | 19,840 | $ | 38,735 | $ | 38,369 | 0.7 | % | 1.0 | % | |||||||
| Service and retailing | 33,398 | 35,404 | 66,140 | 70,085 | (5.7 | ) | (5.6 | ) | |||||||||||
| $ | 53,367 | $ | 55,244 | $ | 104,875 | $ | 108,454 | (3.4 | ) | (3.3 | ) | ||||||||
| Pre-tax earnings | |||||||||||||||||||
| Manufacturing | $ | 3,247 | $ | 3,129 | $ | 5,963 | $ | 6,043 | 3.8 | % | (1.3 | )% | |||||||
| Service and retailing | 1,400 | 1,310 | 2,690 | 2,453 | 6.9 | 9.7 | |||||||||||||
| 4,647 | 4,439 | 8,653 | 8,496 | 4.7 | 1.8 | ||||||||||||||
| Income taxes and noncontrolling interests | 1,046 | 1,059 | 1,992 | 2,028 | |||||||||||||||
| Net earnings* | $ | 3,601 | $ | 3,380 | $ | 6,661 | $ | 6,468 | |||||||||||
| Effective income tax rate | 21.8 | % | 23.2 | % | 22.3 | % | 23.2 | % | |||||||||||
| Pre-tax earnings as a percentage of revenues | 8.7 | % | 8.0 | % | 8.3 | % | 7.8 | % |
——————
** Excludes certain acquisition accounting expenses, which primarily relate to the amortization of intangible assets recorded in connection with certain of our business acquisitions. The after-tax acquisition accounting expenses excluded from earnings were $124 million in second quarter and $248 million in the first six months of 2025 and $137 million in the second quarter and $262 million in the first six months of 2024. These expenses are included in “Other” in the summary of earnings on page 31 and in the “Other” earnings table on page 45.*
Manufacturing
Our manufacturing group consists of a variety of industrial, building and consumer products businesses. A summary of revenues and pre-tax earnings of these operations follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenues | |||||||||||||||
| Industrial products | $ | 9,543 | $ | 9,273 | $ | 18,600 | $ | 18,156 | |||||||
| Building products | 6,945 | 6,897 | 13,113 | 12,986 | |||||||||||
| Consumer products | 3,481 | 3,670 | 7,022 | 7,227 | |||||||||||
| $ | 19,969 | $ | 19,840 | $ | 38,735 | $ | 38,369 | ||||||||
| Pre-tax earnings | |||||||||||||||
| Industrial products | $ | 1,828 | $ | 1,664 | $ | 3,409 | $ | 3,221 | |||||||
| Building products | 1,042 | 1,083 | 1,927 | 2,085 | |||||||||||
| Consumer products | 377 | 382 | 627 | 737 | |||||||||||
| $ | 3,247 | $ | 3,129 | $ | 5,963 | $ | 6,043 | ||||||||
| Pre-tax earnings as a percentage of revenues | |||||||||||||||
| Industrial products | 19.2 | % | 17.9 | % | 18.3 | % | 17.7 | % | |||||||
| Building products | 15.0 | 15.7 | 14.7 | 16.1 | |||||||||||
| Consumer products | 10.8 | 10.4 | 8.9 | 10.2 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Manufacturing, Service and Retailing
Industrial products
The industrial products group includes metal products for aerospace, power and general industrial markets (Precision Castparts Corp. (“PCC”)), specialty chemicals (The Lubrizol Corporation (“Lubrizol”)), metal cutting tools/systems (IMC International Metalworking Companies (“IMC”)), and Marmon, which consists of more than 100 autonomous manufacturing and service businesses, internally aggregated into twelve groups, and includes equipment leasing for the rail, intermodal tank container and mobile crane industries. The industrial products group also includes equipment and systems for the livestock and agricultural industries (CTB International), a leader in drag reducing agents for pipelines (LiquidPower Specialty Products) and a structural steel fabrication products business (W&W|AFCO).
Revenues of the industrial products group were $9.5 billion in the second quarter and $18.6 billion in the first six months of 2025, increases of $270 million (2.9%) and $444 million (2.4%), respectively, compared to the same periods in 2024. Pre-tax earnings increased $164 million (9.9%) in the second quarter and $188 million (5.8%) in the first six months of 2025 compared to 2024. Pre-tax earnings as a percentage of revenues for the group were 18.3% for the first six months of 2025, an increase of 0.6 percentage points compared to 2024.
PCC’s revenues were $2.7 billion in the second quarter and $5.4 billion in the first six months of 2025, increases of 1.6% in the second quarter and 5.1% in the first six months compared to 2024. The increases reflected higher volumes and prices for aerospace products, partially offset by lower sales of power and general industrial products. PCC’s pre-tax earnings increased 37.0% in the second quarter and 38.7% in the first six months of 2025 compared to 2024. The earnings increases reflected aerospace sales increases and improved manufacturing and operating efficiencies. Earnings in the second quarter of 2025 included insurance recoveries associated with a fire at a fasteners facility that occurred in the first quarter of 2025, which mitigated the impact on earnings for the first six months of 2025.
Lubrizol’s revenues were $1.6 billion in the second quarter and $3.2 billion in the first six months of 2025, decreases of 4.9% and 4.8%, respectively, compared to the same periods in 2024. The declines were attributable to lower volumes and selling prices, partially offset by favorable product mix. Lubrizol’s pre-tax earnings declined 11.6% in the second quarter and 18.7% in the first six months of 2025 compared to 2024. The declines were primarily due to lower volumes and selling prices, higher manufacturing costs, as well as restructuring charges in the first quarter of 2025, partially offset by lower raw material costs and selling, general and administrative expenses.
Marmon’s revenues were $3.4 billion in the second quarter and $6.5 billion in the first six months of 2025, increases of 5.8% in the second quarter and 4.6% in the first six months compared to 2024. Seven of the twelve business groups generated higher revenues in the first six months of 2025. Rail & Leasing group revenues increased 14.3%, attributable to higher average lease rates and higher repair and sales volumes. Additionally, revenues in the first six months of 2025 increased in the Water Technologies (11.4%) and Transportation Products (3.9%) groups, primarily due to volume increases. Revenues increased in the Electrical group (4.0%), primarily due to copper price increases, and in the Plumbing & Refrigeration group (9.3%), attributable to volume and copper price increases. The largest revenue declines in the first six months of 2025 were experienced by the Metal Services (10.3%), Retail Solutions (9.9%) and Crane Services (11.4%) groups, reflecting a combination of reduced volumes and lower metals prices in Metal Services.
Marmon’s pre-tax earnings increased 6.9% in the second quarter and 2.3% in the first six months of 2025 compared to 2024, primarily due to reductions of liabilities accrued in connection with a prior business acquisition. Otherwise, operating results among the twelve business groups were mixed in each period. Earnings increases were generated in the Water Technologies, Plumbing & Refrigeration and Transportation Products groups, primarily attributable to a combination of increased volumes, business mix changes and cost management initiatives. Lower earnings were generated by the Electrical group due to lower margins in the building wire business and low demand in the utilities market. Additionally, earnings declined in the Metal Services group due to lower revenues. Rail & Leasing group earnings declined as increased maintenance costs on tank cars requiring regulatory inspection and maintenance procedures and reduced gains from asset sales more than offset the impact of the increases in revenues.
IMC’s revenues were $1.0 billion in the second quarter and $2.0 billion in the first six months of 2025, relatively unchanged compared to 2024. Revenues in 2025 increased due to the impact of business acquisitions, which were substantially offset by lower organic sales attributable to sluggish customer demand across all major regions and lower investment income. The decline in organic sales was attributable to weaker general economic conditions and ongoing geopolitical tensions. IMC’s pre-tax earnings declined 12.0% in the second quarter and 15.5% in the first six months of 2025 compared to 2024. The declines were primarily attributable to lower gross margin rates from higher raw materials costs and unfavorable manufacturing variances, increased selling, general and administrative expenses and lower investment and other income. IMC operates globally and a large portion of its products are manufactured in Israel. IMC’s operations in Israel have not been significantly impacted by the conflicts in the region.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Manufacturing, Service and Retailing
Building products
The building products group includes manufactured and site-built home construction and related lending and financial services (Clayton Homes), flooring (Shaw), insulation, roofing and engineered products (Johns Manville), bricks and masonry products (Acme Brick Company), paint and coatings (Benjamin Moore) and residential and commercial construction and engineering products and systems (MiTek).
Revenues of the building products group increased $48 million (0.7%) in the second quarter and $127 million (1.0%) in the first six months of 2025 compared to 2024. Pre-tax earnings of the group declined $41 million (3.8%) in the second quarter and $158 million (7.6%) in the first six months of 2025 compared to 2024. Our building products businesses are experiencing slowing customer demand and pricing pressures, attributable to prevailing general economic conditions and housing markets.
Clayton Homes’ revenues increased 5.2% to $3.3 billion in the second quarter and 6.2% to $6.2 billion in the first six months of 2025 compared to 2024. Revenues from home sales increased $130 million (2.9%) in the first six months of 2025, reflecting a 2.5% increase in new home unit sales, higher average selling prices and changes in sales mix. Financial services revenues increased 14.4% in the first six months of 2025 compared to 2024, primarily due to increased interest income from higher average loan balances and average interest rates. Loan balances, net of allowances for credit losses, were approximately $28.3 billion as of June 30, 2025, an increase of 11.4% since June 30, 2024. Loan portfolio balances are largely funded by borrowings from Berkshire finance affiliates.
Pre-tax earnings of Clayton Homes declined $12 million (2.5%) in the second quarter and $35 million (3.7%) in the first six months of 2025 compared to 2024, primarily attributable to lower earnings from financial services. The declines in financial services earnings were primarily due to increases in interest expense on borrowings from Berkshire finance affiliates, which more than offset the increases in interest income, as well as higher credit loss provisions attributable to the increases in loan balances and expected loss frequency and severity estimates. Interest expense increased $205 million in the first six months of 2025 versus 2024, as borrowings from affiliates of $25.0 billion at June 30, 2025 increased $6.5 billion since June 30, 2024. The corresponding interest income on such borrowings is included in the “Other” earnings section on page 45.
Other building products businesses revenues declined $115 million (3.0%) in the second quarter and $237 million (3.3%) in the first six months of 2025 compared to the prior year periods. The declines generally reflected lower unit volumes, pricing pressures and the impact of a divesture in 2025. Pre-tax earnings of our other building products businesses declined $30 million (5.1%) in the second quarter and $123 million (10.8%) in the first six months of 2025 compared to 2024. Earnings as a percentage of revenues in the first six months of 2025 declined 1.2 percentage points versus 2024. The earnings declines were primarily attributable to overall lower sales and average gross margin rates, partially offset by lower restructuring and legal expenses compared to 2024.
Consumer products
The consumer products group includes leisure vehicles (Forest River), several apparel and footwear operations (including Fruit of the Loom, Garan, H.H. Brown Shoe Group and Brooks Sports) and a manufacturer of high-performance alkaline batteries (Duracell). This group also includes a global toy company (Jazwares), jewelry products (Richline) and custom picture framing products (Larson-Juhl).
Consumer products group revenues declined $189 million (5.1%) in the second quarter and $205 million (2.8%) in the first six months of 2025 compared to 2024. Revenues at most of our businesses declined in 2025 compared to 2024. Year-to-date revenues declined at Fruit of the Loom (11.7%), Garan (10.1%) and Jazwares (38.5%), primarily attributable to lower volumes, including the impacts of business restructurings and uncertainties arising from international trade policies and tariffs, which produced delays in orders and shipments, particularly in the second quarter. Forest River revenues declined 4.8% in the second quarter and were relatively unchanged in the first six months of 2025 versus 2024, reflecting lower volumes and changes in business mix. Brooks Sports revenues increased 18.4% in the second quarter and 16.8% in the first six months of 2025 compared to 2024, primarily due to increased unit sales and changes in business mix.
Pre-tax earnings of our consumer products group declined $5 million (1.3%) in the second quarter and $110 million (14.9%) in the first six months of 2025 compared to 2024. The earnings decline in the first six months of 2025 was primarily attributable to lower earnings from Jazwares, Forest River, Duracell and Garan, due to generally lower sales volumes and gross sales margins and higher selling, general and administrative expenses as percentages of revenues. These declines were partially offset by higher earnings from Brooks Sports and Fruit of the Loom, attributable to a combination of increased gross margins at each business, as well as lower selling, general and administrative expenses at Fruit of the Loom.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Manufacturing, Service and Retailing
Service and retailing
A summary of revenues and pre-tax earnings of our service and retailing businesses follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Revenues | |||||||||||||||
| Service | $ | 5,677 | $ | 5,211 | $ | 11,170 | $ | 10,362 | |||||||
| McLane | 12,601 | 12,458 | 24,776 | 24,933 | |||||||||||
| Retailing | 5,011 | 4,736 | 9,655 | 9,288 | |||||||||||
| Pilot | 10,109 | 12,999 | 20,539 | 25,502 | |||||||||||
| $ | 33,398 | $ | 35,404 | $ | 66,140 | $ | 70,085 | ||||||||
| Pre-tax earnings | |||||||||||||||
| Service | $ | 729 | $ | 633 | $ | 1,377 | $ | 1,224 | |||||||
| McLane | 176 | 142 | 357 | 307 | |||||||||||
| Retailing | 376 | 336 | 669 | 653 | |||||||||||
| Pilot | 119 | 199 | 287 | 269 | |||||||||||
| $ | 1,400 | $ | 1,310 | $ | 2,690 | $ | 2,453 | ||||||||
| Pre-tax earnings as a percentage of revenues | |||||||||||||||
| Service | 12.8 | % | 12.1 | % | 12.3 | % | 11.8 | % | |||||||
| McLane | 1.4 | 1.1 | 1.4 | 1.2 | |||||||||||
| Retailing | 7.5 | 7.1 | 6.9 | 7.0 | |||||||||||
| Pilot | 1.2 | 1.5 | 1.4 | 1.1 |
Service
Our service group businesses include NetJets and FlightSafety (aviation services), which offer shared ownership programs for general aviation aircraft and high technology training products and services to operators of aircraft, and TTI, a distributor of electronics components. Our other service businesses franchise and service a network of quick service restaurants (Dairy Queen), lease transportation equipment (XTRA) and furniture (CORT), provide third party logistics services that primarily serve the petroleum and chemical industries (Charter Brokerage), distribute electronic news, multimedia and regulatory filings (Business Wire), provide various facilities construction management services (IPS-Integrated Project Services, LLC (IPS)) and operate a television station in Miami, Florida (WPLG). McLane, which we view as a service business, is addressed separately, since it is deemed a separate segment for financial reporting purposes.
Service group revenues increased $466 million (8.9%) in the second quarter and $808 million (7.8%) in the first six months of 2025 compared to 2024. The revenue increases in each period were primarily attributable to higher revenues from aviation services (9.6% year-to-date), IPS (21.1% year-to-date) and TTI (4.8% year-to-date). The revenue increases from aviation services reflected increases in the number of aircraft in shared aircraft ownership programs and in-flight hours across NetJets’ various programs and higher average rates. The increases at TTI reflected higher customer demand in certain geographic regions in the second quarter. The increases at IPS were attributable to revenues from life sciences design and construction and other construction consulting services.
Service group pre-tax earnings increased $96 million (15.2%) in the second quarter and $153 million (12.5%) in the first six months of 2025 compared to 2024, primarily attributable to increases from aviation services, TTI, the leasing businesses and Charter Brokerage. Pre-tax earnings as a percentage of revenues rose 0.5 percentage points in the first six months of 2025 compared to 2024. The earnings increases from aviation services were primarily attributable to increased revenues, partially offset by higher flight crew costs and higher maintenance, fuel and depreciation expenses. TTI’s earnings increases reflected increases in gross sales margins and lower selling general and administrative expenses, including foreign currency exchange gains in 2025.
McLane Company
McLane Company, Inc. (“McLane”) operates a wholesale distribution business that provides grocery and non-food consumer products to retailers and convenience stores (“retail”) and to restaurants (“restaurant”). McLane also operates businesses that are wholesale distributors of distilled spirits, wine and beer (“beverage”). The retail and restaurant businesses generate high sales and very low profit margins and operate in a highly competitive environment. These businesses have several significant customers and a reduction in purchasing by any of these customers could have an adverse impact on McLane’s revenues and earnings.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Manufacturing, Service and Retailing
McLane’s revenues increased 1.1% in the second quarter and were relatively unchanged in the first six months of 2025 compared to 2024. Sales in 2025 generally reflected higher prices due to inventory cost inflation, and lower unit volumes year-to-date, although volume trends improved in the second quarter. Pre-tax earnings increased $34 million (23.9%) in the second quarter and $50 million (16.3%) in the first six months of 2025 compared to 2024, reflecting an increase in the overall gross sales margin rate, partially offset by higher selling, general and administrative expenses.
Retailing
Our retailing businesses include Berkshire Hathaway Automotive, Inc. (“BHA”), which consists of over 80 auto dealerships that sell new and pre-owned automobiles and offer repair services and related products. BHA also offers and insures vehicle service contracts and related insurance products. Our retailing businesses also include four home furnishings businesses (Nebraska Furniture Mart, R.C. Willey, Star Furniture and Jordan’s), which sell furniture, appliances, flooring and electronics. Other retailing businesses include three jewelry businesses (Borsheims, Helzberg and Ben Bridge), See’s Candies (confectionery products), Pampered Chef (high quality kitchen tools), Oriental Trading Company (party supplies, school supplies and toys and novelties) and Detlev Louis Motorrad (“Louis”), a retailer of motorcycle accessories based in Germany. Pilot Travel Centers (“Pilot”), which is primarily a retail business, is addressed separately since it is deemed a separate segment for financial reporting purposes.
Retailing group aggregate revenues increased 5.8% in the second quarter and 4.0% in the first six months of 2025 compared to 2024. BHA’s revenues, which represented about 70% of our retailing group’s revenues in 2025, increased 7.1% in the second quarter and 6.1% in the first six months of 2025 as compared to 2024. The increases reflected higher new and pre-owned vehicle sales revenues, primarily due to increased units sold, higher average prices and changes in sales mix. BHA’s finance and insurance revenues increased 8.2% in the first six months of 2025, while service revenues increased 3.5% compared to 2024, primarily attributable to increased transaction volumes. Revenues of the other retailing businesses increased 2.9% in the second quarter and declined 1.1% in the first six months of 2025 versus 2024. Several of our other retailing businesses experienced sluggish customer demand in the first six months of 2025, attributable to a combination of increased competition and the impacts of higher economic uncertainty and changes in consumer confidence.
Retailing group pre-tax earnings increased $40 million (11.9%) in the second quarter and $16 million (2.5%) in the first six months of 2025 compared to 2024. BHA’s pre-tax earnings increased 8.0% in the second quarter and 4.2% in the first six months of 2025 compared to 2024, attributable to earnings increases from parts/service/repair and finance/service contract operations, partly offset by lower gross sales margins and higher selling, general and administrative expenses. Aggregate pre-tax earnings for the remainder of our retailing group increased $20 million (23.9%) in the second quarter and declined $4 million (2.8%) in the first six months of 2025 compared to 2024. The increase in the second quarter was primarily due to higher earnings from Nebraska Furniture Mart and seasonality effects at See’s Candies.
Pilot Travel Centers
Pilot operates travel centers, primarily under the names Pilot or Flying J, and fuel-only retail locations. Pilot also operates large wholesale fuel and fuel marketing platforms in the U.S. We acquired the remaining 20% noncontrolling interest in Pilot on January 16, 2024.
Pilot’s revenues declined $2.9 billion (22.2%) in the second quarter and $5.0 billion (19.5%) in the first six months of 2025 compared to 2024. The declines were primarily attributable to significantly lower volumes from bulk fuel sales and fuel trading activities, as well as lower average fuel prices, partially offset by increased retail fuel volumes.
Pilot’s pre-tax earnings declined $80 million (40.2%) in the second quarter and increased $18 million (6.7%) in the first six months of 2025 compared to 2024. Earnings in 2025 were negatively impacted by lower gross sales margins and higher selling general and administrative expenses and were favorably affected by lower interest expense and gains from asset dispositions in the first quarter. The increases in selling, general and administrative expenses were primarily due to higher employee compensation and benefits, insurance and maintenance costs. The declines in interest expense were attributable to reduced borrowing levels and lower rates. Pilot’s borrowings are currently from certain Berkshire insurance subsidiaries and approximate $3.9 billion at June 30, 2025, reflecting repayments of $1.6 billion since June 30, 2024.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Investment Gains (Losses)
A summary of investment gains (losses) follows (dollars in millions).
| Second Quarter | First Six Months | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Investment gains (losses) | $ | 6,364 | $ | 23,857 | $ | (71 | ) | $ | 25,733 | ||||||
| Income taxes and noncontrolling interests | 1,394 | 5,107 | (3 | ) | 5,503 | ||||||||||
| Net earnings | $ | 4,970 | $ | 18,750 | $ | (68 | ) | $ | 20,230 | ||||||
| Effective income tax rate | 21.7 | % | 21.3 | % | 14.9 | % | 21.3 | % |
Unrealized gains and losses arising from changes in market prices of our investments in equity securities are included in our reported earnings, which significantly increases the volatility of our periodic net earnings due to the magnitude of our equity securities portfolio and the inherent volatility of equity securities prices. Unrealized gains and losses on our investments in equity securities also include the effects of changes in foreign currency exchange rates on investments in equity securities of non-U.S. issuers that are held by our U.S.-based subsidiaries.
Pre-tax investment gains and losses included unrealized gains of $7.6 billion in the second quarter and $1.2 billion in the first six months of 2025 and unrealized gains of $17.3 billion in the second quarter and $29.7 billion in the first six months of 2024, attributable to changes during the period in market prices on equity securities we held at the end of each period. Taxable investment gains and losses on equity securities sold, which is generally the difference between sales proceeds and the original cost basis of the securities sold, were gains of $5.3 billion in the second quarter and $8.4 billion in the first six months of 2025 compared to gains of $59.6 billion in the second quarter and $73.7 billion in the first six months of 2024.
We believe that investment gains and losses, whether realized from sales or unrealized from changes in market prices, are often meaningless in terms of understanding our reported consolidated earnings or evaluating our periodic economic performance. We also continue to believe the investment gains and losses recorded in earnings in any given period has little analytical or predictive value.
Other
A summary of after-tax other earnings (losses) follows (in millions).
| Second Quarter | First Six Months | ||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Investment income | $ | 866 | $ | 321 | $ | 1,735 | $ | 624 | |||||||
| Foreign currency exchange rate gains (losses) on Berkshire and BHFC non-U.S. Dollar senior notes | (877 | ) | 446 | (1,590 | ) | 1,043 | |||||||||
| Equity method earnings | 184 | * | 220 | 300 | * | 625 | |||||||||
| Acquisition accounting expenses | (124 | ) | (137 | ) | (248 | ) | (262 | ) | |||||||
| Other earnings (losses) | (17 | ) | (97 | ) | (124 | ) | (199 | ) | |||||||
| $ | 32 | $ | 753 | $ | 73 | $ | 1,831 |
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** Excludes other-than-temporary impairment charge of $3.76 billion related to Berkshire’s investment in Kraft Heinz. See Note 5 to the Consolidated Financial Statements.*
Investment income includes corporate interest income and dividend income not allocated to operating businesses. After-tax investment income increased $545 million in the second quarter and $1.1 billion in the first six months of 2025 compared to 2024, primarily due to increased investments in U.S. Treasury Bills, which derived largely from subsidiary dividends.
Foreign currency exchange rate gains and losses on Berkshire’s and BHFC’s senior notes represent the effects of changes in foreign currency exchange rates recognized in earnings from the periodic revaluation of non-U.S. Dollar denominated senior note liabilities into U.S. Dollars. The gains and losses recorded in any given period can be significant due to the magnitude of the borrowings and the inherent volatility in foreign currency exchange rates.
Equity method earnings include our proportionate share of earnings of Kraft Heinz, Occidental and Berkadia. Occidental generated lower equity method earnings in the first six months of 2025 compared to 2024. Additionally, during the second quarter of 2025, we began recording our share of Kraft Heinz’s earnings on a one-quarter lag.
Acquisition accounting expenses include charges arising from the application of the acquisition method in connection with certain of Berkshire’s past business acquisitions. These charges are primarily from the amortization of intangible assets recorded in connection with those acquisitions. Other earnings and losses primarily include unallocated general and administrative expenses, interest expense, income tax expense and interest income on certain intercompany loans.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Financial Condition
Our Consolidated Balance Sheet continues to reflect significant liquidity and a very strong capital base. Berkshire’s shareholders’ equity at June 30, 2025 was $668 billion, an increase of $18.6 billion since December 31, 2024. Net earnings attributable to Berkshire shareholders were $17 billion for the first six months of 2025. Investment gains and losses from changes in the market prices of our investments in equity securities usually produce significant volatility in our earnings.
Berkshire’s common stock repurchase program permits Berkshire to repurchase its Class A and Class B shares at prices below Berkshire’s intrinsic value, as conservatively determined by Warren Buffett, Berkshire’s Chairman of the Board and Chief Executive Officer. We are not committed to a minimum or subject to a maximum repurchase amount. We will not repurchase our stock if it reduces our consolidated cash, cash equivalents and U.S. Treasury Bills holdings to below $30 billion. Financial strength and redundant liquidity will always be of paramount importance at Berkshire. There were no share repurchases in the first six months of 2025.
At June 30, 2025, our insurance and other businesses held cash, cash equivalents and U.S. Treasury Bills of $339.8 billion. Investments in equity and fixed maturity securities, excluding our equity method investments, were $283.0 billion.
Our consolidated borrowings at June 30, 2025 were $127 billion, predominantly issued by Berkshire and BHFC, or by BNSF and BHE and its subsidiaries. Berkshire’s outstanding debt at June 30, 2025 was $21.9 billion, an increase of $770 million since December 31, 2024. In the first six months of 2025, Berkshire repaid approximately $1.6 billion of maturing debt. In April 2025, Berkshire issued ¥90 billion ($632 million) of senior notes with maturity dates ranging from 2028 to 2055 and a weighted average interest rate of 1.637%. Additionally, the carrying value of Berkshire’s non-U.S. Dollar denominated debt increased $1.7 billion in the first six months of 2025 due to foreign currency exchange rate losses. At the end of July 2025, Berkshire issued ¥151.5 billion ($1.0 billion) of senior notes maturing between 2030 and 2040 with a weighted average interest rate of 2.306%.
Senior note borrowings of BHFC, a wholly-owned financing subsidiary, were approximately $18.3 billion at June 30, 2025, an increase of $393 million from December 31, 2024. BHFC’s borrowings are used to fund a portion of loans originated and acquired by Clayton Homes and equipment held for lease by Marmon’s railcar leasing business. Berkshire guarantees BHFC’s senior notes for the full and timely payment of principal and interest.
BNSF’s outstanding debt was $23.9 billion as of June 30, 2025 an increase of $355 million since December 31, 2024. In the first six months of 2025, BNSF repaid term debt of approximately $530 million and in June 2025 issued $900 million of 5.8% debentures due in 2056. BHE’s aggregate borrowings were $58.1 billion at June 30, 2025, an increase of $1.75 billion from December 31, 2024. In the first six months of 2025, BHE subsidiaries issued approximately $2.7 billion of term debt, with a weighted average interest rate of 6.5% and maturity dates ranging from 2035 to 2055, and BHE and its subsidiaries repaid term debt of $2.0 billion and increased short-term borrowings by $564 million. Berkshire does not guarantee the repayment of debt issued by BNSF, BHE or any of their subsidiaries or affiliates.
In the first six months of 2025, our diverse group of businesses generated net operating cash flows of $21.0 billion. Our consolidated capital expenditures for property, plant and equipment and equipment held for lease were $9.1 billion in the first six months of 2025, which included capital expenditures by BNSF and BHE of $6.2 billion. BNSF and BHE maintain very large investments in capital assets (property, plant and equipment) and regularly make significant capital expenditures in the normal course of business. BHE and BNSF forecast capital expenditures of approximately $8.8 billion over the remainder of 2025.
Contractual Obligations
We are party to other contracts associated with ongoing business activities, which will result in cash payments to counterparties in future periods. Certain obligations are included in our Consolidated Balance Sheets, such as borrowings, operating lease liabilities and shared aircraft repurchase liabilities.
We are also obligated to pay claims arising from property and casualty contracts issued by our insurance subsidiaries, including amounts from retroactive reinsurance. However, the timing and amount of the payments under insurance and reinsurance contracts are contingent upon the outcome of future events. Actual payments will likely vary, perhaps materially, from any forecasted payments, as well as from the liabilities recorded in our Consolidated Balance Sheets. We anticipate that these payments will be funded by operating cash flows.
Other obligations pertaining to the acquisition of goods or services in the future, such as certain purchase obligations, are not currently reflected in the Consolidated Financial Statements and will be recognized in future periods as the goods are delivered or services are provided. Except as otherwise disclosed in this Quarterly Report, our contractual obligations as of June 30, 2025 were, in the aggregate, not materially different from those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Berkshire’s Annual Report on Form 10-K for the year ended December 31, 2024.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Estimates
Certain accounting policies require us to make estimates and judgments in determining the amounts reflected in our Consolidated Financial Statements. Such estimates and judgments necessarily involve varying and possibly significant degrees of uncertainty. Accordingly, certain amounts currently recorded in our Consolidated Financial Statements will likely be adjusted in the future based on new available information and changes in other facts and circumstances. Reference is made to “Critical Accounting Estimates” discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Berkshire’s Annual Report on Form 10-K for the year ended December 31, 2024.
Our Consolidated Balance Sheet as of June 30, 2025 included estimated liabilities for unpaid losses and loss adjustment expenses from property and casualty insurance and reinsurance contracts of $150.5 billion. Due to the inherent uncertainties in the processes of establishing these liabilities, the actual ultimate claim amounts will likely differ from the currently recorded amounts. A very small percentage change in estimates of this magnitude can result in a material effect on periodic earnings. The effects from changes in these estimates are recorded as a component of insurance losses and loss adjustment expenses in the period of the change.
Our Consolidated Balance Sheet as of June 30, 2025 included goodwill of acquired businesses of $84.3 billion and indefinite-lived intangible assets of $18.9 billion. In connection with the annual goodwill impairment review conducted in the fourth quarter of 2024, our estimated fair values of seven reporting units did not exceed our carrying values by at least 20%, as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. Our estimated aggregate fair value of these units at that time was approximately $65.6 billion, which exceeded our aggregate carrying value of approximately $57.4 billion. Goodwill of these reporting units totaled approximately $18.6 billion.
Goodwill and indefinite-lived intangible asset impairment reviews include determining the estimated fair values of the reporting units and of the indefinite-lived intangible assets. Several methods and inputs may be used to estimate fair values, and significant judgments are required in making such estimates. Due to the inherent subjectivity and uncertainty in forecasting future cash flows and earnings over long periods of time, actual results may differ materially from the forecasts.
As of June 30, 2025, we concluded it was more likely than not that goodwill and other indefinite-lived intangible assets recorded in our Consolidated Balance Sheet were not impaired. However, the fair value estimates of the reporting units and assets are subject to change based on changes in market and economic conditions and events affecting our businesses, which we cannot reliably predict. It is reasonably possible that adverse changes in such conditions or events could result in the recognition of impairment losses in our Consolidated Financial Statements in the future.
Information concerning accounting pronouncements to be adopted in the future is included in Note 2 to the accompanying Consolidated Financial Statements.
Forward-Looking Statements
Investors are cautioned that certain statements contained in this document as well as some statements in periodic press releases and some oral statements of Berkshire officials during presentations about Berkshire or its subsidiaries are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements include statements which are predictive in nature, which depend upon or refer to future events or conditions, or which include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects and possible future Berkshire actions, which may be provided by management, are also forward-looking statements as defined by the Act. Forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties and assumptions about Berkshire and its subsidiaries, economic and market factors and the industries in which we do business, among other things. These statements are not guarantees of future performance and we have no specific intention to update these statements.
Actual events and results may differ materially from those expressed or forecasted in forward-looking statements due to a number of factors. The principal risk factors that could cause our actual performance and future events and actions to differ materially from such forward-looking statements include, but are not limited to, changes in market prices of our investments in equity securities; the occurrence of one or more catastrophic events, such as an earthquake, hurricane, geopolitical conflict, act of terrorism or cyber-attack that causes losses insured by our insurance subsidiaries and/or losses to our business operations; the frequency and severity of epidemics, pandemics or other outbreaks, and other events that negatively affect our operating results and restrict our access to borrowed funds through the capital markets at reasonable rates; changes in laws or regulations affecting our insurance, railroad, utilities and energy and finance subsidiaries; changes in federal income tax laws; and changes in general economic and market factors that affect the prices of securities or the industries in which we do business.
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