Month: August 2017

Categories
BNSF

BNSF Profits Close to $1 Billion in 2nd Quarter

(BRK.A), (BRK.B)

Berkshire Hathaway’s second quarter profits were bolstered by $958 million, as BNSF’s profits rose a dramatic 24 percent.

Higher carload numbers are continuing to bring good news to BNSF Railway as compared to 2016.

Second quarter and first six months of 2017 operating income were $1.8 billion and $3.4 billion, respectively, an increase of $300 million (20 percent) and $389 million (13 percent), respectively, compared to the same periods in 2016.

Total revenues for the second quarter and first six months of 2017 were up 15 percent and 12 percent, respectively, compared with the same periods in 2016. This is a result of increases in unit volume for the second quarter and first six months of 2017 of 9 percent and 8 percent, respectively, and higher average revenue per car/unit.

The increase in average revenue per car/unit in 2017 was primarily due to higher fuel surcharges and business mix changes as well as increased rates per car/unit.

Business unit second quarter and first half of 2017 volume highlights:

• Coal volumes increased 21 percent and 20 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, due to mild winter weather in the first quarter of 2016 and higher natural gas prices in the first half of 2017, which led to increased utility coal usage, partially offset by the effects of unit retirements of coal generating facilities.

• Consumer Products volumes were up 6 percent for the second quarter and the first six months of 2017, compared with the same periods in 2016, due to higher domestic intermodal, international intermodal and automotive volumes. The increases were primarily due to higher market share, improving economic conditions and normalizing of retail inventories.

• Industrial Products volumes increased 4 percent and 2 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, primarily due to higher minerals, steel, and other commodities that support domestic drilling activity as well as higher taconite. The volume increase was partly offset by lower petroleum products volume due to pipeline displacement of U.S. crude traffic and lower plastics volume.

• Agricultural Products volumes were up 14 percent and 8 percent for the second quarter and the first six months of 2017, respectively, compared with the same periods in 2016, due to higher grain exports.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Acquisitions Berkshire Hathaway Energy

Oncor Plan Would Slash Rates for 54,000 Customers

(BRK.A), (BRK.B)

Oncor Energy, which Berkshire Hathaway is hoping to acquire through its subsidiary Berkshire Hathaway Energy, has announced that it reached a proposed settlement in its rate case, which was filed earlier this year.

The rate case settlement also garnered wide support within the industry and among consumer groups.

Some 54,000 customers scattered across North, West and West Central Texas were suffering under sky-high electric rates from Sharyland Utilities, which has the highest power delivery rates in Texas.

Consumers waged a campaign to bring down those rates, which were hitting farmers and other large energy users particularly hard.

If approved by the Public Utility Commission of Texas, consumers could expect a 40 percent drop in electricity costs. The settlement would have Sharyland customers become Oncor customers.

In a statement, Berkshire Hathaway Energy commends Oncor’s efforts to achieve a balanced outcome for customers that helps keep rates among the lowest in Texas and preserves the company’s ability to invest in its system at reasonable cost.

“Berkshire Hathaway Energy’s ownership structure is a source of financial strength that uniquely positions us to provide the resources Oncor needs to fund the new equity requirement,” said Abel.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
McLane

McLane Company and Love’s Travel Stops Extend 21-Year Relationship

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, a leading supply chain services company providing grocery and foodservice supply chain solutions, has renewed its service agreement with long-time customer Love’s Travel Stops.

As part of this extended agreement, McLane will continue to deliver to more than 430 Love’s stores across 41 states, as Love’s Travel Stops continues to add approximately 40-50 stores per year.

“McLane continually shows commitment to our business. McLane’s Center for Category Innovation assists our team with exceptional category management resources enabling us to grow sales year over year,” said Mark Romig, director of merchandising at Love’s Travel Stops. “McLane’s national scope allows us to achieve our growth goals while meeting the needs of our Customers in an efficient way.”

“Love’s provides a rewarding experience for its customers and we are honored they chose to continue to utilize our best-in-class resources. McLane’s procurement, technology and operations provide our customers superior service and consistency of performance as well as expanded product offerings, regardless of location. As Love’s continues to expand their network, McLane will be there to assist in reducing cost and driving efficiency at retail,” said Vito Maurici, senior VP of sales of McLane Grocery.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Specialty Insurance

Berkshire Hathaway Specialty Insurance Establishes Dublin Office

(BRK.A), (BRK.B)

Berkshire Hathaway Specialty Insurance Company (BHSI) has established a new office in Dublin, Ireland, and appointed Cormac McNamara as Property & Casualty Manager, BHSI Ireland.

“Cormac will build our local team and lead our efforts to bring all of BHSI’s Southern European underwriting capabilities to Ireland,” said Tom Bolt, President, UK and Southern Europe. “We are excited to further expand our geographic footprint in the region as we steadily grow our underwriting capabilities as well.”

Cormac comes to BHSI with 24 years of experience in the UK and Ireland insurance markets. Cormac spent the last six years at MS Amlin/Mitsui Sumitomo Insurance Group, where he held a variety of underwriting positions, most recently Ireland Underwriting & Distribution Manager. Before Mitsui Sumitomo, Cormac was Commercial Insurance Manager, UK Region and Ireland, at Chubb Insurance Company of Europe, and held several other underwriting positions at Chubb prior to beginning his career at QBE Europe.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Categories
Berkshire Hathaway Energy

Berkshire Hathaway’s Utilities Save Millions in Q2 Thanks to EIM

(BRK.A), (BRK.B)

Several of Berkshire Hathaway’s utilities, PacifiCorp and NV Energy, saved millions so far this year through the western Energy Imbalance Market (EIM).

The California Independent System Operator (ISO) reported that the western Energy Imbalance Market produced benefits of $39.52 million in the second quarter of 2017. The benefits since the western regional market was launched in 2014 now total $213.24 million.

In 2014, Berkshire Hathaway Energy’s PacifiCorp agreed to become the first participant in a new Energy Imbalance Market (EIM) as a way to balance electricity in-flows and out-flows on a regional basis and bring millions of dollars in benefits to participating utilities.

During the most recent three-month period, PacifiCorp saw benefits of $8.81 million, and NV Energy total benefits in April and May were $4.62 million, while June benefits are still pending data verification.

The EIM began financially-binding operation on November 1, 2014, by optimizing resources across the ISO and PacifiCorp’s balancing authority areas (BAAs), which includes California, Oregon, Washington, Utah, Idaho and Wyoming.

The EIM improves the integration of renewable resources and increases reliability by sharing information between balancing authorities on electricity delivery conditions across the entire EIM region.

Portland General Electric plans to enter the EIM in October 2017, followed by Idaho Power and Canada’s Powerex in April 2018. The Balancing Authority of Northern California/Sacramento Municipal Utility District, Seattle City Light and Los Angeles Department of Water and Power will begin participating in April 2019. Salt River Project of Phoenix is slated to enter the market in April 2020.

The EIM’s state-of-art technology automatically optimizes the real-time grid to find low cost energy regardless of its location to serve consumers in California, Arizona, Oregon, Washington, Utah, Idaho, Wyoming and Nevada.

Excess renewable energy in one area can be used to serve demand in another seamlessly and effectively, avoiding turning off clean energy resources when not enough local demand exists to use it. Another benefit comes from reducing the amount of energy flexibility reserves utilities must carry to manage load and supply variability, as they can tap into resources outside of their service area to serve their load at less cost.

During Q2 2017, the western EIM helped improve use of renewable resources that is estimated to have reduced carbon emissions by 28,700 metric tons. These emission reductions were made possible by using 67,055 megawatt-hours of excess renewable energy that otherwise would have been turned off.

“The EIM had another strong quarter,” said ISO President and CEO Steve Berberich. “The western real-time market is a proven platform for utilities to find and use low-cost energy that produces substantial cost savings — and it will only get better with seven more utilities preparing to join the market by 2020.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.