Berkshire, Shaw Earnings Up
Omaha, NE, March 6, 2006--Berkshire Hathaway Inc. reported fourth-quarter earnings that were up 54% despite heavy payouts to hurricane-related claims. The company reported net income for the fourth quarter of $5.1 billion, or $3,330 a share. Revenue rose 27% to $25.37 billion. For 2005, the company posted a 16.6% rise in net profit of $8.5 billion, or $5,538, a share, up from $7.31 billion, or $4,753 a share, last year. Revenue rose 9.6% to $81.6 billion from $74.75 billion in 2004. The Shaw unit of Berkshire posted pre-tax earnings for the year 2005 that were up 4% to $485 million vs. $466 million in 2004, Berkshire Hathaway's CEO Warren Buffett in his annual letter to shareholders said,” "We estimate our loss from Katrina at $2.5 billion--and her ugly sisters, Rita and Wilma, cost us an additional $.9 billion." Summing Berkshire Hathaway's performance in 2005, Buffett said it had "a decent year." The company has also chosen a candidate to succeed him, said the 75-year old CEO. Buffett did not disclose the name of his successor, but said Berkshire's board "unaminously agreed" on the the person to take over at the helm. It was a tough year for Berkshire's insurance businesses. The insurance group booked an underwriting profit of $53 million in 2005, down from $1.6 billion a year ago. The sharp decline in profit is due to a $334 million underwriting loss at its General Re unit and a $1.07 billion loss at B-H Reinsurance as a result of the payouts linked to damage caused by the hurricanes that battered the Gulf Coast and Florida in 2005. Buffett said insurance policies for mega-catastrophes would now be offered at prices "far higher than prevailed last year." Its losses at General Re and B-H Reinsurance were partially offset by a rise in underwriting profits at its GEICO car insurance unit. In 2005, profit rose to $1.22 billion from 970 million a year ago. Auto policies in force grew by 12.1% at GEICO, a gain increasing its market share of U.S. private passenger auto business from about 5.6% to about 6.1%. "When Berkshire acquired control of GEICO in 1996, its annual advertising expenditures were $31 million. Last year we were up to $502 million. And I can't wait to spend more," said Buffett. Berkshire said it now holds a 12.2% stake in American Express Co., and an 8.4% stake in Coca-Cola Co. Among its other significant shareholdings, Berkshire Hathaway holds an 18% stake in The Washington Post, a 16.2% stake in Moody's Corporation and a 16% stake in White Mountains Insurance. Buffett said his company has also substantially increased its holdings in Wells Fargo Co., and established a 5.6% stake in Anheuser-Busch and 0.5% stake in Wal-Mart Stores Inc., Berkshire holds a 5.7% stake in Wells Fargo. Buffett cautioned his investors not to expect "miracles" from Berkshire's equity portfolio. "The likelihood is that their per-share earnings, in aggregate, will grow 6% to 8% per share over the decade and that stock prices will more or less match that growth." Berkshire Hathaway's collection of manufacturing, service and retailing companies also put in a solid performance. The division saw net income in 2005 grow 6.9% to $1.65 billion, buoyed by a 6.2% rise in revenue to $46.9 billion. Strong earnings from its building products companies, despite rising raw material and energy costs, helped offset weakness at its flight services unit and at McLane, a wholesale grocery distributor. Its jewelry, home furnishings and candy unit also put in a strong performance. But again, he said, business predictions are just that, expectations: "In both our building-products companies and at Shaw, we continue to be hit by rising costs for raw materials and energy. Most of these operations are significant users of oil and natural gas." The price of Berkshire Hathaway's A-listed shares rose $490 Friday to close at $87,490. The company's B-listed shares added $18.40 to $2,911.40.
Related Topics:Shaw Industries Group, Inc.