Shaw 2004 Earnings Up 11%, Berkshire’s Up 40%

Omaha, NE, March 7—According to Berkshire Hathaway’s year-end 2004 report Shaw Industries in 2004 reported sales that were up 11% to $5.2 billion. The company’s earnings, according to the report, were up 7% to $466 million. The report said that revenues were driven by an approximate 9% increase in square yards of carpet sold, higher net selling prices and increased hard surface and rug sales. It said that sales during the year include those of two businesses acquired by Shaw (Georgia Tufters and the North Georgia operations of the Dixie Group) in 2003, which contributed sales of $240 million in 2004 and $50 million in 2003. The report said that production cost inflation at Shaw was driven by higher petroleum- based raw material and energy related costs. Sales price increases at Shaw, according to the report, have lagged raw material supplier price increases resulting in a decline in gross sales margins during 2004. Further margin declines, it said, in 2005 are possible. Looking a Berkshire Hathaway results for 2004, earnings were up 40 percent on a $1.63 billion gain from currency speculation. Net earnings rose to $3.34 billion, or $2,171 a share, from $2.39 billion, or $1,553, a year earlier. Excluding currency speculation income other investment gains and losses, Berkshire's profit rose 19 percent to $1.84 billion. Buffett, in the 2004 report said he ``struck out'' at finding acquisitions last year, and Berkshire's cash holdings rose to $43.4 billion at yearend from $43 billion on Sept. 30. He and Vice Chairman Charlie Munger, 81, will ``work to translate some of this hoard into more interesting assets during 2005, though we can't promise success,'' Buffett said. He said, ``What Charlie and I would like is a little action now.'' Berkshire's full-year net income fell 10 percent to $7.31 billion amid insurance losses from U.S. hurricanes. Revenue rose 0.9 percent in the fourth quarter to $20 billion. Investment income in insurance businesses, including interest and dividends, dropped 8 percent to $774 million as the cash earned ``paltry returns,'' Buffett said. Berkshire's book value, or assets minus liabilities, rose 10.5 percent in 2004 after taxes, compared with a 10.9 percent gain in the Standard & Poor's 500 Index, before taxes. On that basis, 2004 was one of only six years since 1965 when Berkshire's growth in net worth underperformed the S&P 500, Buffett said in his letter, blaming the lack of acquisition opportunities. Underwriting profit at Berkshire's Geico Corp. auto insurer jumped 90 percent to $292 million as the frequency of accidents and claims declined. Premiums and the number of clients rose, in part from Geico's decision to start selling policies in New Jersey for the first time since 1976, the company said.

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