Shaw Earnings Fall in 3rd Qtr as Margins Squeezed

Omaha, NE, Nov. 10, 2008--Berkshire Hathaway Inc. on Friday reported a 77 percent drop in third-quarter earnings.

Berkshire unit Shaw Industries also reported lower income (before taxes). Shaw's pretax profit fell from $125 million in 2007 to $49 million this year. The company reported revenues of $1.36 billion in the quarter, down from $1.39 billion a year ago.

For the first nine months, Shaw had revenues of $3.92 billion, down from $4.09 billion last year.

Income for the first nine months fell from $327 million last year to $182 million.

The decreases in revenue were primarily due to a reduction in residential carpet sales volume, partially offset by higher average selling prices and revenues from recent acquisitions, the company said.

The earnings declines resulted partly from higher product costs due to  decreased production and rising raw material costs, which are predominantly petrochemical-based.

The gross margin rate fell four percentage points from last year, the company said.

The company expects sales volume and earnings into 2009 to be relatively low.

Berkshire's overall net income fell to $1.06 billion, or $682 per Class A share, in the quarter ending Sept. 30. That's down sharply from year-ago profit of $4.55 billion, or $2,942 per share, which included a $2 billion gain aided by the sale of PetroChina stock.

Berkshire generated $27.9 billion in revenue during the quarter, down from $29.9 billion a year ago.

Berkshire's manufactured housing unit, Clayton Homes, and its financing arm reported a sharp drop in pretax net income to $7 million from $129 million a year ago. Those results were hurt by a $64 million increase in the provision for bad loans and a $22 million loss related to Hurricanes Gustav and Ike.

Earnings also fell in Berkshire's manufacturing and apparel unit, which includes Acme Brick, Benjamin Moore Paint and Fruit of the Loom. That division reported net income of $478 million in the most-recent quarter, down from $567 million a year ago.

Related Topics:Shaw Industries Group, Inc.