Warren Buffett’s Berkshire Hathaway was hit hard by the pandemic last year, but its business rebounded strongly in the last quarter as the U.S. economy reopened, according to its latest results.
The investor conglomerate owns a vast array of railroads, real estate brokerage firms, manufacturers, retailers, distributors, and service companies. Its ‘real economy’ focus made it more vulnerable to coronavirus lockdowns, travel restrictions and supply chain disruptions last year than either Microsoft or Alphabet.
However, many of its businesses outperformed in the second quarter, benefiting from strong demand for homes, furniture, construction products, cars, private jets, electronics, and other products and services.
Income: + 26%
Profit before tax: + 33%
Remarks: Burlington Northern Santa Fe is one of the largest rail networks in North America.
Performance: The railway’s revenues surged as it transported greater volumes of consumer (+ 27%), industrial (+ 18%) and agricultural (+ 13%) products as well as coal (+ 32%) in the last quarter.
BNSF also benefited from resupply to retailers, increased e-commerce and auto shipments, and higher volumes of building and building materials.
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Real estate brokerage
Income: + 48%
Earnings before taxes: + 129%
Remarks: Berkshire operates the nation’s largest residential real estate brokerage firm, Berkshire Hathaway Home Services, as well as one of the nation’s largest franchise networks of residential real estate brokers. The real estate activity is hosted within Berkshire Hathaway Energy.
Performance: The real estate industry made significantly higher profits from brokerage and mortgage services in the last quarter as more real estate deals closed and more people took out mortgages.
Manufacturing – consumer products
Earnings before taxes: + 197%
Remarks: Berkshire owns Forest River (VR), Duracell (batteries), Brooks Sports (clothing and athletic shoes) and Fruit of the Loom (clothing).
Performance: Revenue increased in Duracell, Brooks Sports and apparel businesses in the last quarter.
Forest River revenue jumped 59% in the first half of 2021, driven by higher sales of recreational vehicles. Clothing and footwear sales jumped 47% over the same period as retailers restocked and consumer demand increased.
Manufacturing – construction products
Income: + 29%
Earnings before taxes: + 40%
Remarks: Berkshire owns Clayton Homes (manufactured homes), Shaw (floors), Johns Manville (insulation and roofing), Acme Building Brands (bricks), Benjamin Moore (paints) and MiTek (construction and engineering).
Performance: Clayton’s income jumped 32% as he sold more homes and earned more income per home sold. Its pre-tax profit rose 43%, driven by higher revenue from home sales and mortgages.
Sales jumped 27% in the rest of the construction products unit, driven by increased sales of paints and coatings, residential flooring, engineering products and others building systems.
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Manufacturing – industrial
Income: + 24%
Profit before tax: + 80%
Remarks: Berkshire’s industrial activities include Lubrizol (specialty chemicals), Marmon (industrial holding group), IMC (metallurgy) and Precision Castparts (aerospace components).
Performance: Lubrizol’s sales were up 28%, driven by increased demand for specialty chemicals. Marmon’s revenues jumped 48%, passing higher metal prices on to customers and taking advantage of strong demand in the construction, automotive and foodservice markets. IMC’s revenue jumped 44% on increased sales of metal cutting tools and systems.
Income: + 49%
Earnings before taxes: + 180%
Remarks: Berkshire owns NetJets (fractional ownership of private jets), FlightSafety (pilot training), TTI (electronic components distribution), Dairy Queen (fast food restaurant) and Business Wire (press releases).
Performance: TTI’s revenue grew 52% in the last quarter as electronics companies struggled to maintain inventory in the face of high demand and supply chain disruptions.
Aviation revenues jumped 56%, supported by pilots registering more training hours and private jet customers booking more trips.
Income: + 48%
Earnings before taxes: + 210%
Remarks: Berkshire owns Berkshire Hathaway Automotive (car dealers), See’s Candies (confectionery), Nebraska Furniture Mart (home furnishings), Borsheims (jewelry), Pampered Chef (kitchenware)
Performance: BHA’s revenue grew 29% in the first half of 2021, as both new and used vehicle sales jumped 30%.
Furniture unit revenue grew 38% over the same period, and the rest of the retail business increased its revenue by 51%.