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BRK non-insurance group pre-tax earnings growth in 2018; 24% a TYPO?


el_chieh
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From this year's shareholder letter re non-insurance businesses:

 

"Viewed as a group, these businesses earned pre-tax income in 2018 of $20.8 billion, a 24% increase over

2017."

 

I've not been able to corroborate Buffett's 24% growth figure above.  Is this a typo?!?!

 

I get $21.6BN pre-tax income earned in 2018, up from $19.8BN last year, up 10%.  The passages below match my 10% pre-tax growth above.

 

When discussing pre-tax income in greater granularity, Buffett's # add up to 10% pre-tax income growth instead of 24%

 

Anyone?

 

"Our two towering redwoods in this grove are BNSF and Berkshire Hathaway Energy (90.9% owned). Combined, they earned $9.3 billion before tax last year, up 6% from 2017."

 

"Our next five non-insurance subsidiaries, as ranked by earnings (but presented here alphabetically), Clayton

Homes, International Metalworking, Lubrizol, Marmon and Precision Castparts, had aggregate pre-tax income in 2018

of $6.4 billion, up from the $5.5 billion these companies earned in 2017.

 

The next five, similarly ranked and listed (Forest River, Johns Manville, MiTek, Shaw and TTI) earned $2.4

billion pre-tax last year, up from $2.1 billion in 2017.

 

The remaining non-insurance businesses that Berkshire owns – and there are many – had pre-tax income of

$3.6 billion in 2018 vs. $3.3 billion in 2017."

 

 

 

 

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From this year's shareholder letter re non-insurance businesses:

 

"Viewed as a group, these businesses earned pre-tax income in 2018 of $20.8 billion, a 24% increase over

2017."

 

I've not been able to corroborate Buffett's 24% growth figure above.  Is this a typo?!?!

 

I get $21.6BN pre-tax income earned in 2018, up from $19.8BN last year, up 10%.  The passages below match my 10% pre-tax growth above.

 

When discussing pre-tax income in greater granularity, Buffett's # add up to 10% pre-tax income growth instead of 24%

 

Anyone?

 

"Our two towering redwoods in this grove are BNSF and Berkshire Hathaway Energy (90.9% owned). Combined, they earned $9.3 billion before tax last year, up 6% from 2017."

 

"Our next five non-insurance subsidiaries, as ranked by earnings (but presented here alphabetically), Clayton

Homes, International Metalworking, Lubrizol, Marmon and Precision Castparts, had aggregate pre-tax income in 2018

of $6.4 billion, up from the $5.5 billion these companies earned in 2017.

 

The next five, similarly ranked and listed (Forest River, Johns Manville, MiTek, Shaw and TTI) earned $2.4

billion pre-tax last year, up from $2.1 billion in 2017.

 

The remaining non-insurance businesses that Berkshire owns – and there are many – had pre-tax income of

$3.6 billion in 2018 vs. $3.3 billion in 2017."

Does seem to be a typo. I get similar figures from the 10-K

 

after tax earnings seem to have gone up about 28% but the pre-tax number is 10% according to my calculations as well.

 

      2018 2017
Railroad 6863 6328
Utilities & Energy 2472 2499
MSR 12308 10927
Total 21643 19754

 

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Hey guys - I was curious as well since I also couldn't reverse engineer the math behind the 24% figure.  I asked Debbie Bosanek if it was truly a typo and she had Dan Jaksich, the Controller / VP / principal accounting officer of Berkshire get back to me.  I would expect Dan to take over as CFO if Marc Hamburg retires.

 

Anyway, what he said is this:

 

"The 24% increase in pre-tax earnings referred to on page 8 includes the effects of a number of corporate items, such as interest expense on corporate debt, foreign exchange gains/losses on the Euro denominated debt, and purchase accounting amortization related to these businesses."

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