Berkshire Hathaway Inc.

The stable outlook on BRK reflects S&P Global Ratings' expectation that the group will continue to report solid profitability metrics, significant cash flow generation, and strong EBITDA margins. These factors are in line with our favorable view of the group's strong competitive position, supported by a strong and diversified portfolio of various businesses and management's focus on operating profitability. We also expect BRK will maintain a supportive financial policy with debt to EBITDA below 2.0x and funds from operations (FFO) to debt above 45% on a sustained basis. Furthermore, we expect the insurance segment's financial risk profile will remain very strong, anchored by risk-adjusted capitalization consistent with a 'AA' confidence level (as measured by S&P Global Ratings' capital model). We

...Significant diversity, through a combination of insurance and noninsurance businesses, has led to stable cash flow generation and EBITDA margins for Berkshire Hathaway Inc. (BRK). Despite persistent inflationary headwinds raising expenses across a variety of operations, BRK was able to expand revenue while only experiencing a modest decline in margins. During 2023, the strong recovery in profitability by the insurance business led by Geico has offset softening of earnings from energy, railroads, real estate, and various other businesses. We expect BRK's various businesses to be challenged by inflationary pressures, higher rates, lower consumer demand, litigation accruals, and business mix changes (inclusion of lower-margin Pilot Travel Center). However, we project higher net investment income and improvement in insurance underwriting will help offset some of the headwinds, leading to slightly lower EBITDA margins for the rest of 2023 and into 2024. Acquisition opportunities have been better...

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